Today in economic news,
- United States MBA Mortgage Applications was reported at -3.3% in 30/Mar from 4.8% in the previous period. It was expected at 0.21%.
- United States MBA 30-Year Mortgage Rate was reported at 4.69% in 30/Mar It was inline with expectations.
- United States ADP Employment Change was reported at 241K in Mar from 235K in the previous period. It was expected at 208K.
- United States Markit Composite PMI Final was reported at 54.2 in Mar from 55.8 in the previous period. It was expected at 54.3
- United States Markit Services PMI Final was reported at 54 in Mar from 55.9 in the previous period. It was expected at 54.1
- United States ISM Non-Manufacturing Employment was reported at 56.6 in Mar from 55 in the previous period
ISM Non-Manufacturing: Supply Constraints Growing
At 58.8, the ISM non-manufacturing index signaled a slightly slower pace of growth in March. Weaker orders led the decline, but supply constraints and price pressures are intensifying.
Moderating From a High Level
- The ISM non-manufacturing index signaled that growth cooled a bit in March; but, at 58.8, the index remains consistent with the economy expanding at a decent clip.
- Hiring picked up according to respondents, with the employment index rising 1.6 points to 56.6. Expect to see nonfarm payrolls moderate in Friday’s payroll report, however, after an exceptionally strong February.
Supply Challenges in the Spotlight
- Dragging down the composite index was a slowdown in current production and new orders. Despite the pullback, supply constraints seem to be growing. Backlogs of orders, supplier delivery times and input prices all rose more quickly in March and remain near multi-year highs. A construction firm noted some impact from the recent steel and aluminum tariffs, noting that “accurate, long-term planning has become incredibly difficult.”
- United States Factory Orders MoM was reported at 1.2% in Feb from -1.4% in the previous period. It was expected at 1.7%
Factory Orders Firm in February
Factory orders rose 1.2 percent in February after declining 1.3 percent in January. Core capital goods orders rose a stronger 1.4 percent in February, with many major categories seeing orders rise over the month.
Order Activity Ramped Back Up in February
- February’s 1.2 percent rebound in the headline and 1.4 percent rise in core capital orders is welcome new following January’s decline in both. Volatile aircraft orders were also up in February.
- Shipments of core capital goods rose 1.4 percent in February after remaining flat in January which bodes well for equipment spending in Q1 GDP. Still anticipating it to be less of a boost to Q1 GDP than the double-digit gains in the second half of 2017.
Capital Goods Boost Factory Orders
- February’s increase in order activity was limited to durable goods manufacturers, as nondurable goods orders declined 0.5 percent after rising 1 percent in January. Orders were also much stronger for capital goods, however, goods orders slipped.
- Orders growth by industry was broad-based in February, led by transportation. Solid gains in electrical equipment machinery and primary metals offset a slip in computer-related electronics.