Economic and company news – April 2022

April 8, 2022 - Canada Average Hourly Wages.

A year on year increase of 3.4% is behind the latest inflation rate of 5.7% in Canada meaning workers continue to fall behind.  Whilst employment continues to grow, those finding work, in the most part, are experiencing falling real incomes.

 

 

 

April 7, 2022 - US Consumer Credit Change.

Boom. This sharp rise, ju%s as in the UK, answers questions as to how well positioned the consumer is. To borrow is healthy for the economy as long as confidence is high since it shows an ability to repay. When confidence is low it more reflects a need for borrowing. One caveat may be that all those new employees decided to borrow short term in celebration of finding work.

 

 

April 7, 2022 - US Initial Jobless Claims.

Continued improvement in jobless claims. If inflation was not such an issue (and debt so high), this would be good news.

 

 

 

April 7, 2022 - EA Retails Sales.

A volatile number which looks less strong when you adjust for inflation.

 

 

 

 

April 6, 2022 - US  MBA Mortgage Applications

A 0.1% weekly increase in the 30yr mortgage rate. Another fall in applications which other than a couple of sharp spikes, overall clearly the trend is lower.  If this feeds into prices then I expect buyers will back off, certainly investors as opposed to first-time buyers, and that will exacerbate a downturn in confidence.

 

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April 6, 2022 - Spain Consumer Confidence.

Has to include this simply due to the size of the surprise.  Current conditions even worse then the headline confidence number.  Perhaps the shock of March will see a bounce in April but it is unlikely that economic conditions will have improved given the inflation moves.

 

 

 

 

April 6, 2022 - China Composite PMI.

China is diverging from the Western world due likely to its property market falling sharply.  The CCP is encouraging a relaxing in property purchase restrictions to try and support prices which are so important to middle-class Chinese.

 

 

 

 

April 5, 2022 - US Fed Speaker comments.

This spooked the markets.  The Fed continues to drive home it will be playing catch-up on tightening policy. At this point the Fed speakers seem quite happy to shake the markets to get their point across. Market post the below expects 225bps in rates rises in 2022. Whilst there is not yet any news on consensus for the balance sheet run-off, this message below and the market reaction would suggest market participants have just raised their expectations. Both the equity and bond market fell on this news.

I don't expect the consumer to be aware of the Fed's latest views but during 2022 there will be a noticeable slow-down which could be reinforcing through a wealth effect given the equity and property market have provided so much wealth over the last few years.

 

 

 

 

April 5, 2022 - US Composite PMI.

The usual story of strong growth and strong prices for March PMI in the US.

 

 

 

April 5, 2022 - UK Composite PMI.

A strong number just as in the EA for March in the UK. This adds to inflationary pressures which will build unless either supply can increase or demand falls back.

 

 

 

April 5, 2022 - EA Composite PMI.

Strong March number from business which agrees with the strong employment situation.  PMI is a leading indicator so this shows no hint of recession in the near term.

 

 

 

 

April 1, 2022 - US ISM Manufacturing New Orders.

A number which is not going to ease inflation concerns. If this number does not begin to fall by the end of the year then it is likely inflation will not be tamed in 2022 as the Fed hope.

 

 

April 1, 2022 - US ISM Manufacturing New Orders.

Whilst above 50 and hence a positive number, the trend is now lower. We know March would have been a difficult month with war breaking out in Europe at the end of February. There's no reason to see this number continue to decline at this rate without something else breaking down at the same time.

 

 

 

April 1, 2022 - US ISM Manufacturing PMI.

Whilst lower, this is still a strong number and relatively strong against the numbers in Europe.

 

 

April 1, 2022 - US S&P Manufacturing PMI.

A strong number for March and getting stronger. The move to 'on-shoring' in the US will help keep this number strong.

 

 

 

April 1, 2022 - US Average Hourly Earnings YoY.

Another bump higher in earnings reflecting a tight labour market and perhaps rising inflation and better bargaining by workers.  Since globalisation took hold, workers have not had the upper hand in wage demands. Now with rising inflation and geopolitical frictions increasing, they do. The Fed has to be considering this risk and hence needs inflation lower as soon as possible.

 

 

 

April 1, 2022 - US Unemployment Rate.

Continued good news for employment.  Thankfully hiring continues at a strong pace.  This has its own problems though if firms pay more for staff instead of waiting to fill vacancies with the right candidates at budgeted costs.  We know wages are picking up strongly and labour is organising which will feed back into inflation if businesses cannot get the staff they need.

 

 

April 1, 2022 - EA Inflation Rate.

Whilst the ECB maintains their historically low rates are appropriate, inflation continues to climb and cast a shadow on the prospects of business in 2022.  With fuel and food poverty protests along with rising wage demands, governments across Europe and the ECB will need to show they are acting in the interest of the people, else we will see riots across the continent this summer of 2022.

 

 

 

April 1, 2022 - EA S&P Manufacturing PMI.

Still with a positive outlook, albeit a declining trend, manufacturing PMI in the EA falls in March.  Albeit with a war in Europe and all the uncertainty that must bring, rates are not rising in the near term in the EU.

 

 

 

April 1, 2022 - China Caixin Manufacturing PMI.

A clear miss here in China with a weaker trend. However, China continue to lockdown on Covid concerns so this should be considered temporary. What is more relevant in China is the construction and property sector and whether there is a crash in prices impacting other sectors.