Empire State Manufacturing
Manufacturing activity continued to decline in New York State, according to the March survey. The general business conditions index fell nineteen points to -24.6, continuing the see-saw pattern of ups and downs within negative territory seen in recent months.
The new orders index fell fourteen points to -21.7, indicating that orders declined substantially, and the shipments index fell fourteen points to -13.4,
pointing to a decline in shipments.The unfilled orders index came in at -6.7, a sign that unfilled orders continued to decline.
The index for number of employees fell four points to -10.1, its second consecutive negative reading.
The average workweek index fell six points to -18.5, its lowest level since early in the pandemic, indicating that hours worked shrank for a fourth consecutive month.
Input prices and selling prices increased at a somewhat slower pace than last month: the prices paid index fell three points to 41.9, and the prices received index moved down six points to 22.9.
Yellen Says US Will Intervene If Needed to Protect Smaller Banks
Banking crisis spillover (Axios)
In polling conducted March 10-13 — amid the FDIC seizure of Silicon Valley Bank and myriad headlines about the health of the regional banking system — nearly 19% of adults polled by Morning Consult said they’re worried about losing their job in the next month.
- That’s up materially from 11% a month earlier — and is the highest in more than two years.
- Among high-income respondents (those making more than $100,000 per year) job loss fears were the strongest — at 24%, from just 9% in February.
Data: Morning Consult/Axios Inequality Index; Chart: Axios Visuals
Home Prices Fell in February for First Time in 11 Years The median existing-home price fell 0.2% in February from a year earlier to $363,000. That’s down 12% from June. The price drop and a dip in mortgage rates helped snap a yearlong streak of declining monthly home sales.
Sales of previously owned homes, which make up most of the housing market, rose 14.5% in February from the prior month, but were down 22.6% from a year earlier, the National Association of Realtors said Tuesday. Sales had decreased for 12 consecutive months through January. (…)
Homes typically go under contract a month or two before the contract closes, so the February sales data largely reflect purchase decisions made in January and December. (…)
Real-estate brokerage Redfin Corp. said that about 45% of offers written by its agents faced competing bids in February, down from 66% of offers in February 2022. (…)
There were 980,000 homes for sale or under contract at the end of February, unchanged from January and up 15.3% from February 2022, the NAR said. At the current sales pace, there was a 2.6-month supply of homes on the market at the end of February. (…)
(Pending home sales have now hovered around the same level since November. They rose 0.3% in February from the month before on a seasonally-adjusted basis, and were down 26% from a year earlier—an improvement from the 35.5% record annual drop in the fall.
New listings in February were at the lowest level on record aside from the start of the pandemic. They fell 23.3% year over year on a seasonally-adjusted basis and were down 3.5% from the prior month.
One in seven (14.2%) homes for sale had a price cut in February. While that’s down from a peak of 22% in the fall, it’s still more than double the 5.7% rate of a year earlier.
24% of homes sold above their final list price, down from 45% a year earlier.
It’s worth noting that the housing market shifted in March following the collapse of Silicon Valley Bank. Ongoing turmoil in the banking sector lowered the likelihood of the Federal Reserve hiking interest rates much more this year. That caused mortgage rates to drop, which brought more homebuyers back to the market. The average 30-year-fixed mortgage rate was 6.54% as of Thursday morning, down from nearly 7% at the end of February. The decline comes after rates jumped by almost a whole percentage point during the month of February.
The monthly mortgage payment on the median-asking-price home was $2556 at a 6.6% mortgage rate, the current weekly average. Monthly mortgage payments are up 24% ($499) from a year ago.
The median downpayment is now 10% of the purchase price of the house, off its peak of 17.5%, (which amounted to $65,000), in May 2022.
Nearly one-third home purchases were paid for in cash, the highest share in nine years.
CANADA: Softer Headline But Sequential Core Inflation Edges Up
- CPI +5.2% YoY in February, +5.9% in January. MoM: +0.1% after +0.3%.
- Core CPI +4.8% in February, vs +4.9%. MoM: +0.3% vs +0.1%.
- CPI-Trim +4.8% in February, vs +5.1%.
- CPI-Median +4.9% in February, vs +5.0%.
NBF:
(…) over the past three months, the average of the two measures has moved at an annualized rate of 3.5%, still above the Bank of Canada’s target range but the weakest pace in 16 months. Another core inflation indicator that we like to follow at the moment is the CPI excluding food, energy and mortgage interest costs (driven up by the central bank). Over the past three months, it has been running at a rate of 2.1%, which is at the midpoint of the Bank of Canada’s target range.
Looking ahead, annual inflation is expected to continue to decline rapidly as base effects remain favorable. We are confident that inflation will fall below 3.0% this summer, supported by a continued moderation in the goods component. The current financial turmoil has put pressure on commodity prices. In particular, oil and natural gas prices are at their lowest levels since 2021, meaning that a significant source of inflation in 2022 has been dramatically reversed.
In addition, higher inventories, much lower transportation costs, price cuts by Chinese producers, and weaker global demand all point to a lull in merchandise prices. In the second half of 2022, we have seen a significant easing of demand pressure on prices compared to previous quarters.
Tight monetary policy is likely to continue to weigh on demand in the coming months, as will inflationary pressures from the tight labour market. In our view, the decline in corporate profits and investment over the past two quarters suggests that the current strength in the labour market will prove transitory and that wage pressures will ease as the economy weakens.
China: The World Economics SMI report showed a further acceleration in China’s business activity this month. (The Daily Shot)
Source: World Economics
Pessimism running high
Sentiment is close to lowest we have seen over the past 2 decades. Hartnett’s logic stays intact: “…positioning/policy panic says SPX 3.8k floor holds, fade rally run to >4.1-4.2k.” (The Market Ear)
BofA
