10 Things You Need To Know: April 11, 2023
Key data releases this week include: NFIB Small Business Optimism (Tue), CPI (Wed), FOMC meeting minutes (Wed), PPI (Thu), retail sales (Fri), capacity utilization (Fri), and consumer sentiment (Fri).
Haver
April 5, 2023
The U.S. ISM Services PMI fell to 51.2 during March from 55.1 in February, according to the Institute for Supply Management. The downturn extended the weakening trend in place since its peak in November 2021. The Action Economics Forecast Survey expected a reading of 54.5.
Haver
April 7, 2023
Nonfarm payrolls increased 236,000 in March (2.7% y/y) after rising 326,000 in February and 472,000 in January. Expectations had been for a 240,000 rise in the Action Economics Forecast Survey. Average hourly earnings gained 0.3% last month following an unrevised 0.2% February increase. The unemployment rate eased to 3.5% in March from 3.6% in February.
Capital Economics
April 6, 2023
The latest survey and activity data suggest that, after stagnating in Q4, euro-zone GDP returned to growth in the first quarter. But a recession in the remainder of 2023 still seems likely to us. This coming week, we expect to learn that euro-zone industrial production rose strongly in February while retail sales fell further.
Reuters
April 7, 2023
Russia’s government posted a deficit of 2.4 trillion rubles for the first quarter amid declining energy revenue and heavy federal spending, a sign that its invasion of Ukraine and Western sanctions are weighing on the country’s finances. During the same period in 2022, the government posted a 1.13 trillion ruble surplus.
Barron’s
April 10, 2023
The U.S. government’s net interest outlays for fiscal-year 2023 are expected to be $181 billion, according to the CBO, which is 42% higher than what it had forecast last May. The CBO expects that some $1.7 trillion of net interest costs will be added to the federal deficit over the next decade, 20% higher than what it projected last May. The CBO sees debt in the Treasury market climbing to $46 trillion and total national debt reaching $52 trillion by 2033.
Barron’s
April 10, 2023
Growth in the labor force has helped slow the 12-month increase in average hourly earnings to 5.1% from 5.7% in November. But that’s still far above the Fed’s 2% inflation target. In the shorter term, pay gains have slowed further, to a 3.2% annual rate in the first three months of the year. Assuming productivity is growing at a 1% rate, that would put wage growth at a pace consistent with the Fed’s goal, something that hasn’t been seen for some time.
Barron’s
April 10, 2023
Caution makes sense as we head into what is expected to be a confusing—and volatile—earnings season. Already, there have been 81 negative preannouncements for first-quarter earnings among companies in the S&P 500, compared with 26 positive ones, exceeding the average ratio of negative to positive announcements of 2.5, according to Refinitiv data going back to 1997. Earnings are expected to fall 5.2%, year over year.
American Banker
April 3, 2023
The newest weekly Federal Reserve data shows an improvement in deposits at small and midsize banks, which rose by more than $5.8 billion, or 0.1%, after weeks of outflows. Piper Sandler analyst Scott Siefers noted a “sense of calm seems to be returning to the system following a few unfortunate weeks of turmoil.”
Capital Economics
April 4, 2023
While we expect a more-than 20% peak-to-trough price correction for US commercial real estate, offices face a much tougher outlook, with large falls in net operating incomes compounding the broader re-pricing facing the sector and driving a peak-to-trough price fall of over 30%. Regionally, we expect the greatest pain to be felt in San Francisco, where office values could see an average peak-to-trough fall of 50% and apartment values face the biggest fall.