Wed 4 Apr 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearWall Street’s three major indexes staged a comeback to close around 1% higher on Wednesday as investors turned their focus to earnings and away from a trade conflict between the United States and China that wreaked havoc in earlier trading.

  • The S&P 500 index rose 30.24 points, or 1.16%, to 2,644.69
  • The Dow Jones Industrial Average rose 230.94 points, or 0.96%, to close at 24,264.30
  • The Nasdaq Composite index added 100.83 points, or 1.45%, to 7,042.11.
  • Advancing issues outnumbered declining ones on the NYSE by a 2.19-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favored advancers.
  • The S&P 500 posted one new 52-week high and eight new lows; the Nasdaq Composite recorded 40 new highs and 94 new lows.
  • Volume on U.S. exchanges was 7.04 billion shares, compared with the 7.3 billion average for the last 20 trading days.

After investors fled equities in the morning due to proposed retaliatory tariffs from China, their concerns about a potential trade war eased by the afternoon after Trump’s top economic adviser Larry Kudlow said the administration was in a “negotiation” with China rather than a trade war.

Investors said they were comforted by the fact that any tariffs would not take effect immediately, if at all. Strategists also cited the S&P’s bounce above a key technical support level and said they expect equities to rise further around the first quarter earnings season, due to start in mid-Apr 2018.

“We’re starting to feel that while markets hate uncertainty, Trump’s bark is worse than his bite when it comes to trade. It’s earnings that’s going to lift us off this bottom. It wouldn’t shock me if we chopped around sideways for a little bit before earnings season … The trade stuff is really a side show. We’re waiting for real economic data like the jobs report Friday and for earnings. For now it’s going to be all about the technicals,” said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.

The S&P opened below its 200-day moving average, a key technical level, but inched above it as the session progressed, and by afternoon was in positive territory. The turnaround marked the first time the S&P had showed gains for 2 consecutive days since early Mar 2018.

Despite big swings in stocks, trading activity in U.S. equity options was muted as expectations for strong corporate earnings quelled the urge to load up on contracts that benefit from a surge in market volatility. The CBOE Volatility Index (VIX), the most widely followed barometer of expected near-term volatility for the S&P 500, closed down 1.04 points at 20.06.

The technology sector rose 1.4% with only two of its stocks ending the day in negative territory including Facebook Inc, which was pummelled after news its chief executive would testify in Congress over a data privacy scandal. It too closed well off its session low with a 0.6% drop to $155.10.

Boeing was the biggest drag on the Dow due to its exposure to China, and ended the day well off its session lows with a 1% decline to $327.44 after falling as low as $311.88.

Farm machinery company Deere & Co ended down 2.9% at $148.57 as it could be hurt by China tariffs if its customers’ exports are curbed.

After being a laggard for much of the session, the S&P 500’s industrials sector turned positive late in the day to close 0.4% higher.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) 2,644.69 +1.15% 2,238.83 -1.09%
DJIA INDU 24,264.30 +0.96% 19,762.60 -1.85%
NASDAQ IXIC 7,042.11 +1.45% 5,383.12 +2.00%

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 3.144 +1.54% 2.105 +2.50%
Valuation Rate USD/AUD 0.77663 +0.45% 0.72663 -1.11%
AUD-denominated Index AUD 4.050 +1.08% 2.895 +3.63%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,029.71 +1.08% $1,053 -2.22%
Alphabet C GOOG $1,025.14 +1.15% $1,045.65 -1.97%
Apple AAPL $171.61 +1.91% $169.23 +1.40%
Amazon AMZN $1,410.57 +1.33% $1,169.54 +20.60%
Ebay EBAY $39.79 +0.45% $37.76 +5.37%
Facebook FB $155.10 -0.65% $176.46 -12.11%
PayPal PYPL $74.78 +0.29% $73.61 +1.58%
Twitter TWTR $28.25 +2.57% $24.01 +17.65%
Visa V $119.81 +0.51% $114.02 +5.07%
VMware VMW $121.83 +1.63% $125.32 -2.79%

Selected Tech News Headlines

  • Facebook Says Data From Most of Its 2 Billion Users Vulnerable: “Facebook Inc. said information on most of its 2 billion users could have been accessed improperly, giving fresh evidence of the ways the social-media giant failed to protect people’s privacy while generating billions of dollars in revenue from the information. The company said it removed a tool that let users enter phone numbers or email addresses into Facebook’s search tool to find other people. That was being used by malicious actors to scrape public profile information, it explained. “Given the scale and sophistication of the activity we’ve seen, we believe most people on Facebook could have had their public profile scraped in this way,” the company said. “So we have now disabled this feature.” Facebook also said data on as many as 87 million people, most of them in the U.S., may have been improperly shared with research firm Cambridge Analytica. This is Facebook’s first official confirmation of the possible scope of the data leak, which was previously estimated at roughly 50 million in news reports. It has resulted in calls from legislators and policymakers for greater regulation of social media, helping to shave billion of dollars from the company’s market value. “We didn’t take a broad enough view of what our responsibility was and that was a huge mistake. It was my mistake,” Facebook Chief Executive Officer Mark Zuckerberg said. “We’re broadening our view of our responsibility.” About 270,000 people downloaded a personality quiz app and shared information about themselves and their friends with a researcher, who then passed along the information to Cambridge Analytica, in a move that Facebook says was against its rules. Facebook reached the 87 million figure by adding up all the unique people that those 270,000 users were friends with at the time they gave the app permission. Facebook made the new disclosure in an online posting Wednesday. Cambridge Analytica said that it licensed data on 30 million people, countering Facebook’s 87 million estimate. Cambridge Analytica said in a tweet that it “immediately deleted the raw data from our file server, and began the process of searching for and removing any of its derivatives in our system” after Facebook contacted them to let them know data had been improperly obtained.” Bloomberg

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) index fell 0.1%.
The EUR was little changed at USD 1.228.
Japan’s JPY fell 0.2% to 106.80 per USD.

The yield on 10-year Treasuries rose 2 basis points to 2.79%.
Germany’s 10-year yield fell 1 basis point to 0.49%, the lowest in 12 weeks.
Britain’s 10-year yield fell 2 basis points to 1.359%, the lowest in almost 11 weeks.
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): $63.52/barrel +0.02% Chart
  • ICE (London) Brent North Sea Crude: $68.19/barrel +0.10% Chart
  • NYMEX Natural gas futures: $2.71/MMBTU +0.37% Chart

flag_australia AU: Retail Trade. Feb 2018

Press Release Extract [au_retail]

February Key Points (Current Prices)

  • The trend estimate rose 0.4% in February 2018. This follows a rise of 0.3% in January 2018 and a rise of 0.3% in December 2017.
  • The seasonally adjusted estimate rose 0.6% in February 2018. This follows a rise of 0.2% in January 2018 and a fall of 0.5% in December 2017.
  • In trend terms, Australian turnover rose 2.7% in February 2018 compared with February 2017.
  • The following industries rose in trend terms in February 2018: Food retailing (0.3%), Household goods retailing (0.6%), Other retailing (0.4%), Cafes, restaurants and takeaway food services (0.4%), and Clothing, footwear and personal accessory retailing (0.4%). Department stores (-0.2%) fell in trend terms in February 2018.
  • The following states and territories rose in trend terms in February 2018: Victoria (0.6%), New South Wales (0.3%), Queensland (0.3%), South Australia (0.3%), Western Australia (0.1%), Tasmania (0.2%), the Australian Capital Territory (0.1%), and the Northern Territory (0.2%).

Summary

Australian retail turnover rose 0.6 per cent in February 2018, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures. This follows a 0.2 per cent rise in January 2018.

“All industries saw rises in February” said Ben James, Director of Quarterly Economy Wide Surveys, “led by household goods retailing (1.1 per cent), food retailing (0.3 per cent), cafe’s restaurants and takeaways (0.7 per cent) and clothing, footwear and personal accessories (1.1 per cent). Department stores rose (1.5 per cent) after falls in each of the preceding three months. Other retailing also rose (0.2 per cent).”

In seasonally adjusted terms, there were rises in New South Wales (1.1 per cent), Victoria (1.1 per cent), South Australia (0.7 per cent), the Northern Territory (1.1 per cent), the Australian Capital Territory (0.5 per cent), and Tasmania (0.3 per cent). Western Australia (-0.6 per cent) and Queensland (-0.3 per cent) fell in seasonally adjusted terms.

The trend estimate for Australian retail turnover rose 0.4 per cent in February 2018 following a rise (0.3 per cent) in January 2018. Compared to February 2017 the trend estimate rose 2.7 per cent.

Online retail turnover contributed 5.1 per cent to total retail turnover in original terms in February 2018. In February 2017 online retail turnover contributed 3.6 per cent to total retail.

Total Retail – Monthly

In current prices, the trend estimate for Australian turnover rose 0.4% in February 2018 following a rise of 0.3% in January 2018 and a rise of 0.3% in December 2017.

The seasonally adjusted estimate for Australian turnover rose 0.6% in February 2018 following a rise of 0.2% in January 2018 and a fall of 0.5% in December 2017.

The original estimate for Australian turnover fell 10.0% in February 2018. The original estimate for chains and other larger retailers fell 11.8% in February 2018. The original estimate for smaller retailers fell 5.8% in February 2018.

Total Retail – By State

The following states and territories rose in trend terms in February 2018: Victoria (0.6%), New South Wales (0.3%), Queensland (0.3%), South Australia (0.3%), Western Australia (0.1%), Tasmania (0.2%), the Australian Capital Territory (0.1%), and the Northern Territory (0.2%).

up The following states and territories rose in seasonally adjusted terms in February 2018: New South Wales (1.1%), Victoria (1.1%), South Australia (0.7%), the Northern Territory (1.1%), the Australian Capital Territory (0.5%), and Tasmania (0.3%).
up Western Australia (-0.6%) and Queensland (-0.3%) fell in seasonally adjusted terms in February 2018.

Analysis – By Industry

up Food Retailing

In current prices, the trend estimate for Food retailing rose 0.3% in February 2018. The seasonally adjusted estimate rose 0.3%. By industry subgroup, the trend estimate rose for Supermarket and grocery stores (0.2%), Other specialised food retailing (0.6%), and Liquor retailing (0.3%). The seasonally adjusted estimate rose for Liquor retailing (2.1%), and Supermarket and grocery stores (0.1%), and was relatively unchanged for Other specialised food retailing (0.0%).

up Household Goods Retailing

In current prices, the trend estimate for Household goods retailing rose 0.6% in February 2018. The seasonally adjusted estimate rose 1.1%. By industry subgroup, the trend estimate rose for Electrical and electronic goods retailing (0.9%), and Hardware, building and garden supplies retailing (0.7%), and fell for Furniture, floor coverings, houseware and textile goods retailing (-0.3%). The seasonally adjusted estimate rose for Furniture, floor coverings, houseware and textile goods retailing (2.0%), Hardware, building and garden supplies retailing (1.5%), and Electrical and electronic goods retailing (0.1%).

up Clothing, Footwear and Personal Accessory Retailing

In current prices, the trend estimate for Clothing, footwear and personal accessory retailing rose 0.4% in February 2018. The seasonally adjusted estimate rose 1.1%. By industry subgroup, the trend estimate rose for Clothing retailing (0.5%), and was relatively unchanged for Footwear and other personal accessory retailing (0.0%). The seasonally adjusted estimate rose for Clothing retailing (0.8%) and Footwear and other personal accessory retailing (1.6%).

up Department Stores

In current prices, the trend estimate for Department stores fell 0.2% in February 2018. The seasonally adjusted estimate rose 1.5%.
Graph: Department Stores

Other Retailing

In current prices, the trend estimate for Other retailing rose 0.4% in February 2018. The seasonally adjusted estimate rose 0.2%. By industry subgroup, the trend estimate rose for Pharmaceutical, cosmetic and toiletry goods retailing (0.6%), Other retailing n.e.c. (0.3%), and Other recreational goods retailing (0.3%), and fell for Newspaper and book retailing (-0.6%). The seasonally adjusted estimate rose for Other retailing n.e.c (0.9%) and Pharmaceutical, cosmetic and toiletry goods retailing (0.5%), was relatively unchanged for Other recreational goods retailing (0.0%), and fell for Newspaper and book retailing (-5.7%).

up Cafes, Restaurants and Takeaway Food Services

In current prices, the trend estimate for Cafes, restaurants and takeaway food services rose 0.4% in February 2018. The seasonally adjusted estimate rose 0.7%. By industry subgroup, the trend estimate rose for Cafes, restaurants and catering services (0.4%) and Takeaway food services (0.2%). The seasonally adjusted estimate rose for Takeaway food services (1.5%) and Cafes, restaurants and catering services (0.2%).

Australian Bureau of Statistics, “8501.0 Retail Trade. Feb 2018“, 4 Apr 2018 More

flag_australia AU: Building Approvals. Feb 2018

Press Release Extract [au_building]

Summary

up The number of dwellings approved in Australia fell for the fifth straight month in February 2018 in trend terms with a 0.1 per cent decline, according to data released by the Australian Bureau of Statistics (ABS) today.

Approvals for private sector houses have remained stable at around 10,000 for a number of months.

Justin Lokhorst, Director of Construction Statistics at the ABS said: “The decline in total dwellings was driven by private dwellings excluding houses, which have fallen for five consecutive months.”

Among the states and territories, the biggest trend decrease in dwelling approvals in February was the Australian Capital Territory (18.7 per cent), followed by the Northern Territory (7.2 per cent), Western Australia (4.4 per cent), Tasmania (3.4 per cent) and South Australia (1.2 per cent).

There were increases in trend terms in New South Wales (1.0 per cent), Queensland (0.9 per cent) and Victoria (0.1 per cent).

Approvals for private sector houses rose 0.2 per cent in trend terms in February. Private sector house approvals rose in Victoria (1.1 per cent) and New South Wales (0.8 per cent), but fell in Queensland (1.1 per cent), South Australia (1.1 per cent) and Western Australia (0.5 per cent).

In seasonally adjusted terms, total dwellings fell by 6.2 per cent in February, driven by a 16.4 per cent decline in private sector dwellings excluding houses. Private sector houses rose 1.9 per cent in seasonally adjusted terms.

The value of total building approved fell 1.1 per cent in February, in trend terms, and has fallen for five months. The value of residential building fell 0.1 per cent while non-residential building fell 2.9 per cent.

Key Points

up Total Dwelling Units:

  • The trend estimate for total dwellings approved fell 0.1% in February and has fallen for five months.
  • The seasonally adjusted estimate for total dwellings approved fell 6.2% in February.

up Private Sector Houses

  • The trend estimate for private sector houses approved rose 0.2% in February and has risen for four months.
  • The seasonally adjusted estimate for private sector houses rose 1.9% in February.

up Private Sector Dwellings Excluding Houses

  • The trend estimate for private sector dwellings excluding houses fell 1.1% in February and has fallen for five months.
  • The seasonally adjusted estimate for private sector dwellings excluding houses fell 16.4% in February.

Value of Building Approved

  • up The trend estimate of the value of total building approved fell 1.1% in February and has fallen for five months. The value of residential building fell 0.1%. The value of non-residential building fell 2.9% and has fallen for six months.
  • up The seasonally adjusted estimate of the value of total building approved rose 4.1% in February. The value of residential building fell 4.3%, while the value of non-residential building rose 22.6%.

Building Approvals

  • up The trend estimate for total dwelling units (Australian total) fell 0.1% in February.
  • up The trend estimate for private sector houses approved rose 0.2% in February..
  • up The trend estimate for private sector dwelling units excluding houses fell 1.1% in February.
  • up The trend estimate for the value of new residential building approved fell 0.2% in February and has fallen for two months.
  • up The trend estimate for the value of alterations and additions to residential building rose 1.3% in February and has risen for nine months.
  • up The trend estimate for the value of non-residential building approved fell 2.9% in February and has fallen for six months.

Dwelling Units Approved: State Trends (Trend Estimates)

  • NSW:
    up The total number of dwelling units approved in New South Wales rose 1.0% in February after falling for five months.
    up The number of private sector houses rose 0.8% in February and has risen for four months.
  • Victoria:
    up The total number of dwelling units approved in Victoria rose 0.1% in February and has risen for nine months.
    up The number of private sector houses rose 1.1% in February and has risen for 13 months.
  • Queensland:
    up The total number of dwelling units approved in Queensland rose 0.9% in February and has risen for four months.
    up The number of private sector houses fell 1.1% in February and has fallen for five months.
  • South Australia:
    upThe total number of dwelling units approved in South Australia fell 1.2% in February and has fallen for six months.
    up The number of private sector houses fell 1.1% in February and has fallen for four months.
  • Western Australia:
    up The total number of dwelling units approved in Western Australia fell 4.4% in February and has fallen for five months.
    up The number of private sector houses fell 0.5% in February and has fallen for nine months.

Australian Bureau of Statistics, “8731.0 Building Approvals. Feb 2018“, 4 Apr 2018 More

flag_europe EU: Unemployment. Feb 2018

Press Release Extract [eu_ue]

The euro area (EA19) seasonally-adjusted unemployment rate was 8.5% in February 2018, down from 8.6% in January 2018 and from 9.5% in February 2017. This is the lowest rate recorded in the euro area since December 2008. The EU28 unemployment rate was 7.1% in February 2018, down from 7.2% in January 2018 and from 8.0% in February 2017. This is the lowest rate recorded in the EU28 since September 2008. These figures are published by Eurostat, the statistical office of the European Union.

eu_ue_20180403

Eurostat estimates that 17.632 million men and women in the EU28, of whom 13.916 million in the euro area, were unemployed in February 2018. Compared with January 2018, the number of persons unemployed decreased by 201 000 in the EU28 and by 141 000 in the euro area. Compared with February 2017, unemployment fell by 1.968 million in the EU28 and by 1.436 million in the euro area.

Member States

Among the Member States, the lowest unemployment rates in February 2018 were recorded in the Czech Republic (2.4%), Germany and Malta (both 3.5%) as well as Hungary (3.7% in January 2018). The highest unemployment rates were observed in Greece (20.8% in December 2017) and Spain (16.1%).

eu_ue_20180403_states

Compared with a year ago, the unemployment rate fell in all Member States except Estonia where it increased (from 5.8% to 6.5% between January 2017 and January 2018). The largest decreases were registered in Cyprus (from 12.6% to 9.6%), Greece (from 23.4% to 20.8% between December 2016 and December 2017) and Croatia (from 12.0% to 9.6%).

In February 2018, the unemployment rate in the United States was 4.1%, stable compared to January 2018 and down from 4.7% in February 2017.

Youth unemployment

In February 2018, 3.589 million young persons (under 25) were unemployed in the EU28, of whom 2.520 million were in the euro area. Compared with February 2017, youth unemployment decreased by 314 000 in the EU28 and by 213 000 in the euro area. In February 2018, the youth unemployment rate was 15.9% in the EU28 and 17.7% in the euro area, compared with 17.3% and 19.4% respectively in February 2017. In February 2018, the lowest rates were observed in Germany (6.2%), the Netherlands (7.2%) and the Czech Republic (7.5%), while the highest were recorded in Greece (45.0% in December 2017), Spain (35.5%) and Italy (32.8%).

Eurostat, “Unemployment. Feb 2018“, 4 Apr 2018 More

flag_europe EU: Flash Estimate Euro Area Inflation. Mar 2018

Press Release Extract [eu_cpi]

Euro area annual inflation is expected to be 1.4% in March 2018, up from 1.1% in February, according to a flash estimate from Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in March (2.2%, compared with 1.0% in February), followed by energy (2.0%, compared with 2.1% in February), services (1.5%, compared with 1.3% in February) and non-energy industrial goods (0.2%, compared with 0.6% in February).

Eurostat, “Flash Estimate Euro Area Inflation. Mar 2018“, 4 Apr 2018 More

flag_usa US: ADP National Employment Report. Mar 2018

Press Release Extract [us_adp]

Private sector employment increased by 241,000 jobs from February to March according to the March ADP National Employment Report®

us_adp1_20180404

us_adp2_20180404

“We saw impressive momentum in the first quarter of 2018 with more jobs added per month on average than in 2017,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Midsized businesses added nearly half of all jobs this month, the best growth this segment has seen since the fall of 2014. The manufacturing industry also performed well, with its strongest increase in more than three years.”

us_adp3_20180404

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is rip-roaring. Monthly job growth remains firmly over 200,000, double the pace of labor force growth. The tight labor market continues to tighten.”

ADP Research Institute, “ADP National Employment Report. Mar 2018“, 4 Apr 2018 (08:15) More

flag_usa US: Manufacturers Shipments Inventories and Orders. Feb 2018

Press Release Extract [us_inventories]

Summary

New orders for manufactured goods in February, up six of the last seven months, increased $6.0 billion or 1.2 percent to $498.0 billion, the U.S. Census Bureau reported today. This followed a 1.3 percent January decrease. Shipments, up fourteen of the last fifteen months, increased $1.0 billion or 0.2 percent to $500.5 billion. This followed a 0.7 percent January increase. Unfilled orders, up five of the last six months, increased $1.9 billion or 0.2 percent to $1,142.8 billion. This followed a 0.3 percent January decrease. The unfilled orders-to-shipments ratio was 6.49, down from 6.52 in January. Inventories, up fifteen of the last sixteen months, increased $2.3 billion or 0.3 percent to $675.2 billion. This followed a 0.4 percent January increase. The inventories-to-shipments ratio was 1.35, unchanged from January.

us_manuf_20180404

New Orders

New orders for manufactured durable goods in February, up three of the last four months, increased $7.2 billion or 3.0 percent to $247.3 billion, down from the previously published 3.1 percent increase. This followed a 3.6 percent January decrease. Transportation equipment, also up three of the last four months, led the increase, $5.5 billion or 7.0 percent to $83.5 billion. New orders for manufactured nondurable goods decreased $1.2 billion or 0.5 percent to $250.7 billion.

Shipments

Shipments of manufactured durable goods in February, up nine of the last ten months, increased $2.2 billion or 0.9 percent to $249.8 billion, unchanged from the previously published increase. This followed a 0.5 percent January increase. Machinery, up six of the last seven months, led the increase, $0.6 billion or 1.7 percent to $33.3 billion. Shipments of manufactured nondurable goods, down following eight consecutive monthly increases, decreased $1.2 billion or 0.5 percent to $250.7 billion. This followed a 1.0 percent January increase. Petroleum and coal products, down following seven consecutive monthly increases, drove the decrease, $2.0 billion or 3.7 percent to $50.5 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in February, up five of the last six months, increased $1.9 billion or 0.2 percent to $1,142.8 billion, unchanged from the previously published increase. This followed a 0.3 percent January decrease. Transportation equipment, up two of the last three months, led the increase, $1.4 billion or 0.2 percent to $773.3 billion.

Inventories

Inventories of manufactured durable goods in February, up nineteen of the last twenty months, increased $1.8 billion or 0.4 percent to $410.8 billion, unchanged from the previously published increase. This followed a 0.4 percent January increase. Transportation equipment, up three consecutive months, led the increase, $0.7 billion or 0.5 percent to $132.7 billion. Inventories of manufactured nondurable goods, up nine consecutive months, increased $0.4 billion or 0.2 percent to $264.4 billion. This followed a 0.4 percent January increase. Petroleum and coal products, up eight consecutive months, led the increase, $0.2 billion or 0.5 percent to $42.8 billion. By stage of fabrication, February materials and supplies increased 0.6 percent in both durable goods and nondurable goods. Work in process increased 0.4 percent in durable goods and decreased 0.6 percent in nondurable goods. Finished goods increased 0.4 percent in durable goods and increased 0.2 percent in nondurable goods.

US Census Bureau, “Full Report – Manufacturers Shipments Inventories and Orders. Feb 2018“, 4 Apr 2018 (10:00) More

flag_usa US: IHS Markit US Services PMI. Mar 2018

Press Release Extract [us_psi]

Key findings:

  • Service sector output and new order growth ease…
  • …but rates of expansion remain robust overall
  • Upturn in employment reaches seven-month high

us_psi_20180404

March survey data indicated a strong expansion in business activity across the U.S. service sector. That said, the growth rate softened from that seen in February and was below the long-run series average. Similarly, the upturn in new business softened from the previous month but was sharp overall. In line with sustained increases in client demand, the rate of job creation accelerated to a seven-month high. Meanwhile, both input price and output charge inflation remained strong and above their respective series averages.

The seasonally adjusted final IHS Markit U.S. Services Business Activity Index registered 54.0

in March, down from 55.9 in February. Nonetheless, output growth was strong overall. Moreover, the index average for first three months of 2018 was broadly in line with the rate of expansion seen over 2017 as a whole. Panellists largely linked the upturn in business activity to diversification and more favourable demand conditions.

New business received by service providers grew sharply in March, albeit at a slightly softer rate than February’s 35-month high. Furthermore, the rate of increase remained well above the long-run series average. Alongside greater client demand, panellists attributed the rise in new orders to wide- reaching marketing campaigns and increases in customer referrals.

Greater business requirements and a strong rise in output were listed as influential factors behind the latest increase in employment levels. Service providers registered a strong rate of job creation that was the fastest since August 2017.

For the eleventh successive month, the level of outstanding business at service providers increased. The rate of accumulation dipped to a three-month low and was only marginal, with respondents suggesting the latest rise was due to ongoing growth in new business.

On the price front, the rate of input cost inflation softened from February’s multi-year high. That said, cost burdens still rose at a strong pace. A number of survey respondents stated that the increase in input prices stemmed from higher fuel and wage costs.

Reflective of favourable demand conditions, greater cost burdens were largely passed on to clients through higher charges. The rate of output price inflation eased slightly from that seen in February but remained strong overall.

Finally, forecasts for output over the coming year moderated in March and dipped below the series average. Positive sentiment was commonly linked to greater client demand and favourable demand conditions.

IHS Markit Final U.S. Composite PMI™

The final seasonally adjusted IHS Markit U.S. Composite PMI™ Output Index dipped to 54.2 in March from 55.8 in February. Both the manufacturing and service sector recorded softer output growth than in February.

us_composite_pmi_20180404

That said, the composite output increase was strong overall. Moreover, the average rise in new orders over the first three months of 2018 was the strongest since the third quarter of 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.

Comment

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

“Measured across both manufacturing and services sectors, US business activity growth slowed in March compared to February’s 27-month high, but remained encouragingly solid.

“The month rounds off a quarter in which the PMI surveys indicate that the economy grew at an annualised rate of approximately 2.5% (though official GDP data are likely to come in at least 0.5% weaker, due to seasonality issues).

“Strong inflows of new orders means growth looks set to accelerate into the second quarter. The past two months have seen the largest back-to-back increases in demand for almost three years.

“The strongest jobs gain since December 2016 further underscored the bullish outlook, as firms stepped up their hiring to meet the recent upturn in demand.
“Price pressures meanwhile eased slightly during the month, though remained elevated by standards of the past four years, linked in many cases to healthy demand boosting firms’ pricing power, as well as recent tariff announcements adding to inflationary pressures in the manufacturing sector.

“Expectations about future growth were mixed: while recent protectionist announcements appear to have helped bolster confidence in parts of the domestic manufacturing sector, service sector optimism came off the boil.”

IHS Markit, “IHS Markit U.S. Services PMI™ – final data (with composite PMI™). Mar 2018“, 4 Apr 2018 (09:45) More

flag_usa US: ISM Report on Business – Non-Manufacturing. Mar 2018

Press Release Extract [us_ism_psi]

Economic activity in the non-manufacturing sector grew in March for the 98th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®:

  • NMI® at 58.8%
  • Business Activity Index at 60.6%
  • New Orders Index at 59.5%
  • Employment Index at 56.6%

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee: “The NMI® registered 58.8 percent, which is 0.7 percentage point lower than the February reading of 59.5 percent. This represents continued growth in the non-manufacturing sector at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased to 60.6 percent, 2.2 percentage points lower than the February reading of 62.8 percent, reflecting growth for the 104th consecutive month, at a slower rate in March. The New Orders Index registered 59.5 percent, 5.3 percentage points lower than the reading of 64.8 percent in February. The Employment Index increased 1.6 percentage points in March to 56.6 percent from the February reading of 55 percent. The Prices Index increased by 0.5 percentage point from the February reading of 61 percent to 61.5 percent, indicating that prices increased in March for the 25th consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth. Despite the slight dip in the NMI® composite index, the non-manufacturing sector enjoyed another month of strong growth in March. The cooling off of the New Orders Index possibly prevented an even stronger reading for the NMI® composite index. The majority of respondents remain positive about business conditions.”

Industry Performance

The 15 non-manufacturing industries reporting growth in March — listed in order — are: Mining; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Real Estate, Rental & Leasing; Wholesale Trade; Finance & Insurance; Management of Companies & Support Services; Professional, Scientific & Technical Services; Accommodation & Food Services; Public Administration; Construction; Health Care & Social Assistance; Other Services; and Utilities.

The two industries reporting contraction in March are: Educational Services; and Information.

NMI®

In March, the NMI® registered 58.8 percent, 0.7 percentage point lower than the 59.5 percent registered in February, indicating continued growth in the non-manufacturing sector for the 98th consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

An NMI® above 49 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the March NMI® indicates growth for the 103rd consecutive month in the overall economy, and indicates expansion in the non-manufacturing sector for the 98th consecutive month. Nieves says, “The past relationship between the NMI® and the overall economy indicates that the NMI® for March (58.8 percent) corresponds to a 3.6 percent increase in real gross domestic product (GDP) on an annualized basis.”

Business Activity

ISM®’s Business Activity Index registered 60.6 percent in March, a decrease of 2.2 percentage points from the February reading of 62.8 percent. This represents growth in business activity for the 104th consecutive month. Thirteen industries reported increased business activity, and one industry reported decreased activity for the month of March. Comments from respondents include: “Business is increasing” and “New business gained.”

The 13 industries reporting growth of business activity in March — listed in order — are: Mining; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Finance & Insurance; Construction; Public Administration; Accommodation & Food Services; Health Care & Social Assistance; Wholesale Trade; and Other Services.

The only industry reporting a decrease in business activity in March is Educational Services.

New Orders

ISM®’s Non-Manufacturing New Orders Index registered 59.5 percent, a decrease of 5.3 percentage points from the February reading of 64.8 percent. March represents growth in new orders for the 86th consecutive month, at a slower rate compared with February. Comments from respondents include: “New business contracts” and “Many new products are reaching new markets.”

The 13 industries reporting growth of new orders in March — listed in order — are: Real Estate, Rental & Leasing; Mining; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Finance & Insurance; Transportation & Warehousing; Other Services; Wholesale Trade; Professional, Scientific & Technical Services; Public Administration; Management of Companies & Support Services; Health Care & Social Assistance; and Accommodation & Food Services.

The two industries reporting a decrease in business activity in March are: Educational Services; and Information.

Employment

Employment activity in the non-manufacturing sector grew in March for the 49th consecutive month. ISM®’s Non-Manufacturing Employment Index registered 56.6 percent, which reflects an increase of 1.6 percentage points when compared to the February reading of 55 percent. Twelve industries reported increased employment, and two industries reported decreased employment. Comments from respondents include: “Staffing to process increased volume” and “Increasing manpower slowly to cover expected new orders.”

The 12 industries reporting an increase in employment in March — listed in order — are: Retail Trade; Transportation & Warehousing; Wholesale Trade; Management of Companies & Support Services; Finance & Insurance; Utilities; Real Estate, Rental & Leasing; Mining; Construction; Public Administration; Professional, Scientific & Technical Services; and Health Care & Social Assistance.

The two industries reporting a reduction in employment in March are: Educational Services; and Other Services.

Supplier Deliveries

Supplier deliveries were slower in March for the 27th consecutive month. The index registered 58.5 percent, which is 3 percentage points higher than the 55.5 percent registered in February. This indicates that deliveries are slowing at a faster rate in March. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Weather delays” and “Suppliers unable to keep up.”

The 11 industries reporting slower deliveries in March — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Management of Companies & Support Services; Accommodation & Food Services; Mining; Wholesale Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services; Construction; Finance & Insurance; and Public Administration. No industry reported faster deliveries in March.

Seven industries reported no change in March compared to February.

Inventories

ISM®’s Non-Manufacturing Inventories Index grew in March for the second consecutive month, registering 53.5 percent, which is the same percent reported in February. Of the total respondents in March, 30 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Increasing sizes of material purchases to lock in pricing” and “Adding inventory in reaction to back orders.”

The eight industries reporting an increase in inventories in March — listed in order — are: Wholesale Trade; Utilities; Real Estate, Rental & Leasing; Public Administration; Mining; Information; Accommodation & Food Services; and Health Care & Social Assistance.

The seven industries reporting decreases in inventories in March — listed in order — are: Arts, Entertainment & Recreation; Educational Services; Other Services; Management of Companies & Support Services; Professional, Scientific & Technical Services; Retail Trade; and Finance & Insurance.

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in March for the 25th consecutive month. ISM®’s Non-Manufacturing Prices Index registered 61.5 percent, 0.5 percentage point higher than the 61 percent reported in February. Thirty percent of respondents reported higher prices, 66 percent indicated no change in prices paid and 4 percent of respondents reported lower prices.

The 12 non-manufacturing industries reporting an increase in prices paid during the month of March — listed in order — are: Wholesale Trade; Mining; Agriculture, Forestry, Fishing & Hunting; Construction; Management of Companies & Support Services; Finance & Insurance; Public Administration; Accommodation & Food Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; Transportation & Warehousing; and Information.

No industries reported a decrease in prices in March compared to February. Six industries reported no change in prices in March compared to February.

Backlog of Orders

ISM®’s Non-Manufacturing Backlog of Orders grew in March. The index registered 56.5 percent, which is 0.5 percentage point higher than the 56 percent reported in February. Of the total respondents in March, 34 percent indicated they do not measure backlog of orders.

The eight industries reporting an increase in order backlogs in March — listed in order — are: Management of Companies & Support Services; Wholesale Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Public Administration; Mining; Information; and Finance & Insurance.

The six industries reporting a decrease in order backlogs in March — listed in order — are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Utilities; Other Services; and Construction.

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based personnel grew for the 14th consecutive month, at a slower rate in March. The New Export Orders Index registered 58 percent, which is 1.5 percentage points lower than the 59.5 percent reported in February. Of the total respondents in March, 66 percent indicated they either do not perform, or do not separately measure, orders for work outside of the U.S.

The nine industries reporting an increase in new export orders in March — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Retail Trade; Real Estate, Rental & Leasing; Finance & Insurance; Other Services; Construction; Wholesale Trade; and Professional, Scientific & Technical Services.

The four industries reporting a decrease in exports are: Utilities; Arts, Entertainment & Recreation; Educational Services; and Information.

Imports

The Imports Index reading of 55 percent is 5 percentage points higher than the 50 percent reported in February. Fifty-four percent of respondents reported that they do not use, or do not track the use of, imported materials.

The nine industries reporting an increase in imports for the month of March — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Retail Trade; Mining; Information; Transportation & Warehousing; Health Care & Social Assistance; Wholesale Trade; and Construction.

The three industries reporting a decrease in imports in the month of March are: Arts, Entertainment & Recreation; Educational Services; and Professional, Scientific & Technical Services. Six industries reported no change in imports in March compared to February.

Inventory Sentiment

The ISM® Non-Manufacturing Inventory Sentiment Index in March registered 58.5 percent, which is 2.5 percentage points lower than the 61 percent that was reported in February. This indicates that respondents believe their inventories are still too high at this time. In March, 20 percent of respondents said their inventories were too high, 3 percent of the respondents said their inventories were too low, and 77 percent said their inventories were about right.

The seven industries reporting a feeling that their inventories were too high in March — listed in order — are: Wholesale Trade; Information; Utilities; Mining; Other Services; Health Care & Social Assistance; and Professional, Scientific & Technical Services.

The three industries reporting a feeling that their inventories were too low in March compared with February are: Educational Services; Management of Companies & Support Services; and Transportation & Warehousing. Seven industries reported no change in inventory sentiment in March compared to February.

Institute for Supply Management, “Report on Business – Non-Manufacturing. Mar 2018“, 4 Apr 2018 (10:00) More

flag_japan Japan update

Nikkei Japan Services PMI. Mar 2018

Press Release Extract [jp_psi]

Key points:

  • Weaker rises in both activity and new orders
  • Firms hire staff at quickened pace amid rising backlogs of work
  • Output price inflation remains relatively marked

jp_psi_20180404

The Japanese service sector continued to grow during March, albeit at a softer pace. A weaker rise in activity was underpinned by a slower expansion in new business inflows. Despite this, firms hired new staff at a quicker rate as part of efforts to clear rising levels of unfinished work.

On the price front, input cost inflation eased to a three-month low, but remained strong. Output prices on the other hand rose to a faster extent.

The headline index from the survey – the seasonally adjusted Business Activity Index – declined to 50.9 in March from 51.7 in February, signalling the weakest expansion in service sector output since October 2016. Nonetheless, the latest upturn extends the current sequence of rising activity to 18 months.

Likewise, Japanese goods producers expanded output at a softer pace. Subsequently, the Nikkei Composite Output Index fell to 51.3 during March from 52.2 in February.

According to anecdotal evidence, Japanese service providers increased output amid new customer acquisitions and higher demand. New business rose during March, maintaining a trend of new order growth which has been apparent since August 2016. However, the rate of expansion softened for a second successive survey period to an 18-month low.

Meanwhile, new orders rose to a slower extent in the manufacturing sector. The pace of expansion eased to a five-month low, but remained solid overall.

In line with the sustained upturn in demand, capacity pressures continued to be exerted on Japanese service providers. That said, the rate of backlog accumulation was only slight and weakened on that seen during February.

Consequently, businesses recruited additional staff to clear outstanding orders and accommodate for further demand pressures. The rate of job creation accelerated to a modest pace and the joint-fastest since December last year, on a par with January.

Manufacturing firms also expanded operating capacity by hiring new staff during March. The pace of employment growth eased, but remained broadly in line with the 12-month average.

Continued sales growth also encouraged firms to raise selling prices. Japanese service providers have now increased output charges for eight successive months. The rate of inflation accelerated fractionally and was strong relative to historical trends.

That said, some panellists noted that prices were hiked due to higher operating expenses. Input costs rose strongly during March, despite the rate of inflation easing to a three-month low. Panellists reported that greater cost burdens were a result of higher delivery, fuel and labour prices.

Similarly, manufacturers raised output prices to a relatively marked degree during March. Higher food, fuel and metals prices impacted profit margins however, with input costs rising sharply.

Finally, business confidence towards activity over the forthcoming 12 months remained elevated during March. Companies widely anticipate demand to rise, with some predicting gains from the upcoming Olympic Games. That said, the degree of optimism eased to a six-month low.

Comment

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

“The Japanese service sector lost further momentum during March, with overall business activity growing at the weakest pace since October 2016. New order receipts rose, albeit only slightly and at the softest rate in a year-and-a-half.

“That said, despite PMI data signalling disappointing output and demand conditions, prospects appear upbeat. Incoming new business has grown for 20 successive survey periods, and firms expect this trend to continue, as indicated by a solid degree of optimism towards future activity. This sustained upturn in demand led to capacity pressures however, with backlogs of work rising for a third month running. In turn, recruitment picked up, further suggesting confidence among firms that new sales will continue to be secured over the coming months.

“Expansionary order book volumes also encouraged firms to hike their selling prices. That said, the rate of output price inflation was broadly unmoved from the slight pace seen during February. Anecdotal evidence suggested that rising cost burdens were a key factor behind this latest rise. However, recent yen strength provides a source of downward cost pressures, which could ultimately cause output price discounting.”

IHS Markit, “Nikkei Japan Services PMI. Mar 2018“, 4 Apr 2018 More

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flag_china China update

Caixin China General Services PMI. Mar 2018

Press Release Extract [cn_psi]

Key points

  • Chinese business activity growth weakens amid slower upturn in new orders
  • Composite employment declines for first time in five months
  • Input prices increase at weakest pace since last July

cn_output_pmi_20180404

The Caixin China Composite PMI™ data (which covers both manufacturing and services) indicated that total Chinese business activity expanded at the slowest pace for four months at the end of the first quarter. Notably, the Composite Output Index fell from 53.3 in February to 51.8 in March, to signal only a modest pace of expansion.

The dip in the headline index was driven by weaker increases in output across both the manufacturing and service sectors during March. Furthermore, rates of growth slipped to four-month lows in both sectors. At 52.3 in March, the seasonally adjusted Caixin China General Services Business Activity Index fell further from January’s multi-year peak, having slipped from 54.2 in February. The latest reading pointed to a modest increase in services activity that was softer than the long-run trend. Growth in manufacturing output was also slightly weaker than that seen on average over the series’ 14-year history.

In line with the trend for activity, manufacturers and service providers both noted slower upturns in new order volumes during March. Moreover, rates of growth were identical and modest across both sectors. Services companies generally linked higher sales to new client wins and new offerings, but some cited concerns over exchange rate movements and lower tourist numbers. Consequently, softer rises across both monitored sectors led to the slowest expansion in composite new business for six months at the end of the first quarter.

Employment trends deteriorated across both sectors during March. Services companies added to their payrolls at a marginal pace that was the weakest in the current 19-month sequence of expansion. At the same time, job shedding intensified at goods producers, with workforce numbers declining at the fastest rate since last August. As a result, composite employment fell for the first time since last October, albeit at a marginal pace.

Outstanding business increased slightly at services companies, following broadly stagnant backlogs over the opening two months of the year. Meanwhile, unfinished workloads increased for the twenty-fifth month running at manufacturers, and at a stronger rate than in February. At the composite level, the amount of work-in-hand (but not yet completed) rose at a pace that, though modest, was the second-fastest since January 2017.

Services companies based in China signalled a further increase in input costs during March. That said, the rate of inflation was the slowest recorded for four months and moderate overall. Cost burdens also increased at a weaker pace across the manufacturing sector, where prices rose to the least extent for nine months. Overall, input costs grew at the softest pace since last July.

Chinese companies continued to increase their selling prices in March as part of attempts to pass on higher cost burdens to clients. Although both manufacturers and services companies recorded slightly faster rates of charge inflation compared to February, increases were modest overall.

While the level of positive sentiment strengthened to a one-year high at manufacturers, optimism across the service sector dipped to a six- month low in March. At the composite level, business confidence edged up fractionally to the highest for nine months.

Comment

Commenting on the China General Services PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

“The Caixin China General Services Business Activity Index fell to 52.3 in March from 54.2 in February.

“Both new business and employment grew at a slower rate last month, pointing to cooling demand. However, the ability of service providers to make a profit improved as input costs increased at a weaker pace while output prices edged up. The sub-index gauging service companies’ expectations towards business activity over the next 12 months declined to the lowest reading since September, suggesting that weakening demand has affected firms’ confidence.

“The headline Caixin China Composite PMI dropped to 51.8 in March, the lowest reading in four months but remaining in expansionary territory. The slowdown of output growth in the services sector was faster than that in the manufacturing industry. The increase in input costs slowed while that in output prices picked up, improving chances for companies to gain a profit.

“Overall, the growth momentum of the Chinese economy weakened in March.”

IHS Markit, “Caixin China General Services PMI. Mar 2018“, 4 Apr 2018 More

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