Edge and Odds

The enemy of knowledge is not ignorance, it’s the illusion of knowledge (Stephen Hawking)

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

Edge and Odds

Invest with smart knowledge and objective odds

U.S. FLASH MANUFACTURING PMI, ORDERS PICK UP IN MARCH

U.S. manufacturers indicated a strong end to the first quarter of 2015, with output, new business and employment all rising at an accelerated pace in March. As a result, the seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) picked up to 55.3 in March, up from 55.1 in February and well above the neutral 50.0 threshold. The latest reading signalled the strongest overall improvement in manufacturing business conditions since October 2014.
March data pointed to a steep expansion of manufacturing production volumes, with the latest upturn the fastest for six months.

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Anecdotal evidence cited improving demand from domestic clients, successful new product launches and, in some cases, a catch-up effect following disruptions related to adverse weather earlier in the year.

Manufacturing new order levels increased at a robust and accelerated pace in March, driven by improving economic conditions and positive overall spending patterns among clients. The latest rise in incoming new work was the fastest for five months, but still less marked than the average for 2014 as a whole. Some manufacturers commented that weak demand from clients in the oil industry remained a factor weighing on new business gains, while a number of firms also pointed to softer export sales.

The latest survey indicated a decline in new work from abroad for the first time in four months, which survey respondents mainly linked to competitive pressures and the impact of the strong dollar/euro exchange rate.

Resurgent output and new business growth contributed to a further upturn in manufacturing payroll numbers during March. Higher levels of employment have now been recorded for 21 months in a row, and the latest increase was the fastest since last November. Additional staff hiring also reflected renewed pressures on operating capacity, as highlighted by the sharpest rise in backlogs of work for six months in March.

Average cost burdens decreased for the third month running in March, to signal the longest continuous period of falling input prices since mid-2009. As a result, factory gate charges increased at the joint-slowest rate since August 2012.

Manufacturers indicated another lengthening of suppliers’ lead-times. However, the latest deterioration in vendor performance was less marked than the 12-month low recorded in February. Some manufacturers noted that disruptions related to adverse weather and U.S. west coast port strikes had started to diminish.
Meanwhile, manufacturers continued to boost their input buying and inventory levels in March, which survey respondents linked to rising production schedules and a positive outlook for overall client demand.

NEW$ & VIEW$ (24 MAR. 2015):

U.S. Consumer Prices Rise For First Time Since October U.S. consumer prices climbed for the first time in four months in February, potentially reassuring the Federal Reserve that the economic recovery is on track as it considers raising interest rates.

The consumer-price index, reflecting what Americans pay for everything from groceries to housing, rose 0.2% in February from the prior month, the Labor Department said Tuesday. That marked the first increase since October and the biggest rise since June.

Core prices, which exclude volatile food and energy costs, also rose 0.2% last month after increasing at the same pace in January. (…)

The climb in core prices was driven largely by higher housing costs. Shelter expenses—reflecting the cost of housing, including rent—climbed 0.2%, accounting for about two-thirds of the overall rise in core prices.

Prices for medical-care commodities increased 0.7% due largely to rising prices for prescription drugs. But prices for medical-care services dropped for the first time since 1975.

U.S. Existing-Home Sales Up 1.2% Sales of previously owned homes ticked up last month, but buyers are facing a dynamic of rising home prices and shrinking inventory that make homes less affordable.

Existing-home sales increased 1.2% last month from January to a seasonally adjusted annual rate of 4.88 million, the National Association of Realtors said Monday. Sales in February were up 4.7% from the same month a year earlier.

Total housing inventory at the end of February increased 1.6% from a month earlier, to 1.89 million existing homes available for sale. But the increase was small compared with the typical rise in inventory from January to February, which has averaged about 5.6% since 2000, Mr. Yun said. (Chart from Haver Analytics)

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New Signs of China Slowdown China’s economy is showing new signs of flagging, as an early indicator of factory activity this month fell to an 11-month low.

See CHINA FLASH MANUFACTURING AT 49.2 IN MARCH

A separate proxy measure of growth by Capital Economics—mixing electricity production, transport usage, and the like—is at its lowest since the 2003 SARS crisis. The proxy indicates growth on a year-over-year basis in the first quarter will dip below the government’s full-year target of 7%.

Some more signs:

The March NMI (75% Mfg; 25% Services) Survey also was no good. January-February electricity consumption rose 2.6% YoY vs +4.2% in December and +3.3% in November. The PBoC survey of urban households showed continued decline in buying intentions for housing.

Travelling day for me, hence this short post.