THE DAILY EDGE: 5 APRIL 2021

U.S. Added 916,000 Jobs in March as Hiring Accelerated

(…) and the unemployment rate, determined by a separate survey, fell to 6.0%, a pandemic low. Still, as of March, there are 8.4 million fewer jobs than in February 2020 before the pandemic hit. (…)

Friday’s report showed hiring rose in most industries, led by a gain of 280,000 in the category that includes restaurants and hotels. Employment also rose sharply in construction, most manufacturing sectors and public and private schools. Temporary help and auto manufacturing, where a semiconductor shortage has idled assembly plants, were weak spots.

Nearly two million fewer Americans reported last month they were unable to work because their employer closed or lost business due to the pandemic and 500,000 less said they couldn’t seek work due to the pandemic. The share of employees who worked remotely due to the coronavirus also declined last month, the Labor Department said. (…)

Last month, restaurants and bars added 176,000 jobs, arts, entertainment and recreation venues added 64,000 jobs, and accommodations added 40,000 jobs. Still, employment in the overall leisure and hospitality sector is down by 3.1 million, or 18.5% from February 2020. (…)

Construction added 110,000 jobs in March [after shedding 56k in February, likely weather related]. Warehousing and transportation, driven by online shopping, added 48,000 jobs. Job gains in manufacturing sectors such as metal fabrication, machinery and food processing offset the decrease in auto making. (…) (WSJ)

Also:

Hours worked rose to 34.9 vs 34.6 in February and vs 35 in January.
Average hourly earnings declined 0.1% MoM (likely mix as leisure/hospitality workers are leading the job gains) but average weekly earnings rose .7% MoM and 6.7% YoY.

The Payrolls Index (employment x hours x wages) jumped 1.4% MoM in March and is up 1.7% QoQ after +2.7% in Q4’20 and 5.8% in Q3. Weekly payrolls are now above their February 2020 peak in spite of the 8.4 million missing workers.

It is now up 2.1% YoY suggesting positive YoY growth in total spending in coming months.

Jobs Report Might Shift Thinking on Inflation, Yields Economists were caught off guard by March’s strong labor market gains and might need to play catch-up on bond yield forecasts

U.S. employers added 916,000 jobs in March or some 241,000 more than predicted by a Wall Street Journal survey of economists. February’s gains were revised higher as well. (…)

The survey week on which the March payrolls report was based came before Americans began to receive their latest stimulus checks and when tens of millions fewer vaccines had been administered than today. A report on Thursday by the National Federation of Independent Business showed a record share of respondents with job openings and a one-year high in the share of businesses that were raising wages to attract workers. (…)

U.S. March PMI at second-highest on record amid marked new order growth and supply chain disruptions

March PMI^TM data from IHS Markit indicated the second-strongest improvement in the health of the U.S. manufacturing sector since data collection began in May 2007. The overall expansion was supported by the steepest rise in new orders since June 2014, although production was reportedly held back by supply shortages. Supplier lead times lengthened to the greatest extent on record. At the same time, inflationary pressures intensified, with cost burdens rising at the quickest rate for a decade. Firms partially passed on higher input costs to clients through the sharpest increase in charges in the survey’s history.

The seasonally adjusted IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 59.1 in March, up from 58.6 in February but broadly in line with the earlier released ‘flash’ estimate of 59.0. The latest reading was the second-highest on record and signalled a marked improvement in operating conditions across the U.S. manufacturing sector.

Goods producers registered the fastest upturn in new business for almost seven years in March. Anecdotal evidence suggested the expansion was due to a broad-based strengthening of client demand, though led by a record surge in new orders for consumer goods. Some companies also reported stockpiling efforts among their customers amid soaring input prices. New export orders also increased, albeit at the softest pace for three months.

While output rose for a ninth successive month, the faster rise in demand did not translate into sharper production growth as output was reportedly constrained by supply shortages and unprecedented extensions to lead times. Although still strong overall, the rate of expansion in output was the slowest since last October.

Manufacturers signalled the greatest deterioration in vendor performance since data collection began in May 2007.

Transportation delays, supplier shortages and coronavirus disease 2019 (COVID-19) restrictions reportedly caused logistical difficulties.

Subsequently, input prices rose markedly. The rate of cost inflation was the steepest since March 2011, with firms stating that supply shortages and transportation delays often drove prices up and led to additional fees.

Firms were, however, able to pass on part of the hike in costs to clients, as selling price inflation accelerated to a fresh series peak. The rate of increase quickened for the fifth successive month.

In line with capacity constraints, backlogs of work accumulated at the fastest pace on record in March. As a result, firms expanded their workforce numbers further and at a solid rate. Companies also noted that increased work-in-hand led to a strong depletion of post-production inventories, as current holdings of finished goods were used to fulfil new orders.

Meanwhile, manufacturers stepped up their efforts to stockpile inputs to avoid further delays and safeguard future production. Purchasing activity rose at the quickest pace since September 2018. Consequently, pre-production inventories were broadly unchanged, following a solid contraction in February.

Finally, output expectations strengthened in March. The degree of confidence was the second-highest for over six years, as firms were buoyed by hopes of a successful vaccine roll-out, fresh stimulus and a resulting boost to new sales.

Canadian manufacturing PMI hits survey-record high in March

Canadian manufacturers ended the first quarter with a survey-record improvement in overall business conditions. A substantial rise in new work boosted production volumes and stimulated job creation in March. The surge in demand contributed to a strong rise in backlogs, the second-fastest on record. However, material shortages and border restrictions linked to the coronavirus disease 2019 (COVID-19) pandemic continued, which contributed to the greatest lengthening in lead times since April 2020.

Rising prices for inputs including lumber and metals led to the fastest increase in average cost burdens since August 2018. The improved demand environment allowed firms to pass on higher expenses, however.

The headline seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index® (PMI®) registered 58.5 in March, up considerably from 54.8 in February, to become the highest reading in over ten years of data collection.

Manufacturers reported the second-fastest rise in output levels since the series began, which was often linked to increased workloads and greater production capacity. Meanwhile, new work expanded at the joint-third fastest pace to date. Survey respondents widely commented on greater demand from both domestic and export markets.

To cater for the surge in demand, manufacturers added to workforce numbers during the month, with the rate of job creation reaching a three-month high. Despite this, there were further signs that manufacturing companies were unable to keep up with rising workloads at the end of the quarter, with volumes of unfinished business increased at a near survey-record pace. Some manufacturers noted that stretched supply chains and a shortage in the supply of material resulted in the build-up of outstanding work.

Average lead times from vendors lengthened to the second-greatest extent since the survey began in the late-2010. Anecdotal evidence suggested border restrictions (linked to COVID-19), adverse weather conditions and supplier shortages had led to worsening vendor performance.

In line with higher output, firms raised their input buying at the end of the quarter, with the latest increase the fastest in three months. Manufacturers meanwhile sought to build safety stock with the rise in pre-production inventories the largest in two-and-a-half years.

Robust demand for raw materials contributed to the strongest rate of input cost inflation since August 2018. Survey respondents commented on higher prices for steel and lumber in particular. The stronger demand environment allowed firms to pass on the higher expenses, however.

Manufacturers remain upbeat about their growth prospects over the next 12 months, with the degree of optimism the strongest since May 2019. Some companies based their expectations on a return to normality following vaccination rollouts whilst others hoped for stronger economic conditions.

U.S. manufacturing sector index races to 37-year high in March: ISM

The Institute for Supply Management (ISM) said on Thursday its index of national factory activity jumped to a reading of 64.7 last month from 60.8 in February. That was the highest level since December 1983. (…)

Its forward-looking new orders sub-index jumped to 68.0 in March. That was the highest reading since January 2004 and was up from 64.8 in February. Factories also received more export orders, while order backlogs swelled. (…)

U.S. Light Vehicle Sales Strengthen During March

U.S. sales of light vehicles strengthened last month as COVID-19 vaccines were more readily available. The Autodata Corporation reported that light vehicle sales during March surged 13.0% to 18.00 million units (SAAR) and were up by more than one-half y/y.

Sales of light trucks jumped 13.3% (66.0% y/y) during March to a record 13.99 million units. (…) Trucks’ share of the light vehicle market improved to a record 77.7%.

Auto sales increased 12.0% (35.9% y/y) last month to 4.01 million units, the highest level since February of last year. (…)

Imports’ share of the U.S. vehicle market increased last month to 24.4%, up from a low of 19.9% during all of 2015. (…)

China looks to rein in lending to cool property boom Small and foreign banks rush to ‘radically’ reduce loans that buoyed Covid recovery

The FT reveals that after new loan growth hit 16% in the first two months of the year, the PBOC instructed domestic and foreign lenders “to keep new loans in the first quarter of the year at roughly the same level as last year, if not lower”.

Mortgage Firms Warned to Prepare for a ‘Tidal Wave’ of Distress

Mortgage companies could face penalties if they don’t take steps to prevent a deluge of foreclosures that threatens to hit the housing market later this year, a U.S. regulator said Thursday.

The Consumer Financial Protection Bureau warning is tied to forbearance relief that’s allowed million of borrowers to delay their mortgage payments due to the pandemic. To avoid what the bureau called “avoidable foreclosures” when the relief lapses, mortgage servicers should start reaching out to affected homeowners now to advise them on ways they can modify their loans. (…)

More than 2 million borrowers as of January had either postponed their payments or failed to make them for at least three months, the bureau said. Once government-authorized forbearance plans begin to end in September, hundreds of thousands of people may need assistance getting back on track.

Risky Borrowers Are Falling Behind on Car Payments The rising subprime delinquencies point to an uneven economic recovery and a deep divergence between those who can navigate the coronavirus downturn and those who can’t

Some 10.9% of subprime borrowers with outstanding auto loans or leases were more than 60 days past due in February, up from 10.7% in January and 8.7% a year prior, according to credit-reporting firm TransUnion. It marked the sixth consecutive month-over-month increase and the highest level in monthly data going back to January 2019.

More than 9% of subprime auto borrowers were more than 60 days past due in the fourth quarter, the highest quarterly figure in data going back to 2005. (…)

Many lenders granted customers one to three months of relief before requiring them to start paying again. Some customers started the pandemic in relatively good financial shape but have fallen into what is considered subprime, which many lenders define as those with credit scores of 600 or less on a scale of 300 to 850. (…)

Subprime financing accounted for about 19% of the number of auto loans and leases originated in 2020, down from roughly 22% a year prior, according to Experian PLC.

That decline has contributed to the increasing proportion of subprime delinquencies. With fewer subprime loans being made, the delinquent borrowers make up a bigger share of the subprime pool. (…)

The share of borrowers with midrange to near-perfect credit scores who have missed auto-loan or lease payments remains close to 0%, according to TransUnion. (…)

OPEC, Allies Agree to Boost Output, Betting on Demand Rebound OPEC and an alliance of other top oil producers agreed to boost their collective production by more than two million barrels a day over coming months.

The Organization of the Petroleum Exporting Countries and a group of other big producers led by Russia agreed to boost output in May by 350,000 barrels a day, and by the same amount again in June, according to delegates. They agreed to then increase output by another 450,000 barrels a day in July. Saudi Arabia, meanwhile, agreed to start easing separate, unilateral cuts of one million barrels a day that it put in place earlier this year. It plans to end those cuts altogether by the end of July, delegates said. (…)

Ahead of the meeting between the two groups, Saudi Arabia had initially backed plans to keep production unchanged, delegates said. The decision to hike output “was a complete U-turn,” one of them said. (…)

US retail trading cools as hot stocks fade and lockdowns ease Stimulus cheques fail to ignite new surge with consumers saving for holidays and goods

(…) “Sitting on these losses, investors are less likely to deploy capital immediately,” said Viraj Patel, a strategist at Vanda. “We’re not seeing net selling — they’re just waiting for a rebound in some of these names.” (…)

The WSJ adds:

(…) companies across the industry experienced steep declines in traffic in March, compared with February. Robinhood Markets Inc., for example, saw about a 35% drop-off in traffic, according to SimilarWeb, whose data doesn’t capture traffic via apps. (…) “People are still more engaged than they have been historically, ” said Devin Ryan, director of financial technology research at JMP Securities, noting that trading activity is still higher than many periods of 2020. (…)

Canada’s IPO craze hit by growth stock selloff, Canadarm maker MDA slashes deal size by 20%

U.S. Growth Stirs Fears of New ‘Taper Tantrum.’ This Time May Be Different. Red-hot U.S. economy draws billions from emerging markets, reviving memories of past investor flight, but developing world entered pandemic stronger

(…) As investors rush to buy U.S. assets, they have driven U.S. Treasury bonds yields sharply higher this year. Should that continue, economists worry that the higher returns offered for riskless investments in the world’s largest economy could pull money from emerging markets, where vaccine campaigns have barely begun. (…)

Indeed, over the past month, central banks in Brazil and Russia, in addition to Turkey, have raised interest rates, in part to defend against capital outflows and to support their currencies. (…)

The increase in emerging markets’ interest rates awakened memories of the so-called “Taper Tantrum” of 2013. In May of that year, then-Federal Reserve Chairman Ben Bernanke told lawmakers the central bank was considering a slowdown in its purchases of government bonds, without actually announcing such a change in policy.

To many Fed watchers, he was simply repeating a view first expressed in January 2013. But investors took fright and pushed yields on U.S. government bonds sharply higher, sending shock waves around the world, with particularly troubling consequences for emerging markets.

To stem the 2013 outflow of capital, a number of central banks in large developing countries had to raise their key interest rates, thereby slowing their economies. Should they be forced to do so again this year, it would add to an already weak recovery from the effects of the pandemic. (…)

In 2013, current-account deficits—a measure of how much capital a country needs—had been large for a number of years, so it was a problem when investors became reluctant to provide more capital. Now, according to Fitch Ratings, those gaps are significantly smaller.

Fitch economists estimate that current-account deficits for 81 countries they monitor will be just 2% of annual economic output this year, compared with 3.2% in 2013. (…)

“I wouldn’t discount the possibility of a repeat of 2013,” said Stephen Schwartz, head of sovereign ratings for the Asia-Pacific region at Fitch Ratings, but “even if there were to be a repeat, it would likely be contained.”

A 28% Tax Rate Will Cost Companies, but Not Equally Tax bills would rise most for U.S.-focused firms that benefited more from 2017 tax cuts, offsetting some gains from stimulus spending.

A tax increase, which would take effect as early as January 2022, would cut into corporate profits as the economy recovers, and the Biden plan could reduce the earnings of companies in the S&P 500 by at least 10%, said accounting analyst Dave Zion of the Zion Research Group. (…)

Those with a high proportion of domestic earnings are directly affected by the rate increase while multinationals are likely to focus more on the changes to the minimum tax on foreign income. (…)

Large U.S. multinational companies paid an 8.8% tax rate on their world-wide income in 2018, down from 15.8% in 2017, according to data released recently by the congressional Joint Committee on Taxation. (…)

The Biden plan also raises taxes on U.S. companies’ foreign income. It would create a 15% minimum tax on companies’ income as reported on financial statements—partly a response to companies that report profits to investors but use legal credits and deductions to reduce their tax bills.

That tax is likely to be scaled-back from the version Mr. Biden campaigned on; it would cover only about 200 companies and avoid clawing back the benefits of many tax credits, including those for corporate research. (…)

Wall Street braces itself for tax rises from Biden’s new stimulus plan Proposal could slash 9% off earnings per share in S&P 500 companies next year, says Goldman
Some Democrats Cool to Biden’s Corporate Tax Rate Plan The president’s tax increases on corporations as part of a $2.3 trillion infrastructure plan has drawn a skeptical reaction from some Democrats, who instead favor borrowing money or raising other levies

COVID-19

Countries set to pay economic price for failing to control Covid Nations with fresh infections and slower vaccination face weaker recovery, research suggests

U.S. infections rising (CalculatedRisk)

Via John Authers:

Diverging paths:
But there is also that:

Pfizer Shot Remains More Than 91% Effective After Six Months
Covid Mutants Multiply as Scientists Race to Decode Variations
Indian state announces strict new curbs as Covid cases climb Economic powerhouse Maharashtra recorded more than 57,000 new infections on Sunday

Note: Translation is Google’s with obvious oddities…

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THE DAILY EDGE: 5 APRIL 2021

U.S. Added 916,000 Jobs in March as Hiring Accelerated

Jobs Report Might Shift Thinking on Inflation, Yields Economists were caught off guard by March’s strong labor market gains and might need to play catch-up on bond yield forecasts

U.S. March PMI at second-highest on record amid marked new order growth and supply chain disruptions

U.S. Light Vehicle Sales Strengthen During March

China looks to rein in lending to cool property boom Small and foreign banks rush to ‘radically’ reduce loans that buoyed Covid recovery

Mortgage Firms Warned to Prepare for a ‘Tidal Wave’ of Distress

OPEC, Allies Agree to Boost Output, Betting on Demand Rebound OPEC and an alliance of other top oil producers agreed to boost their collective production by more than two million barrels a day over coming months.

US retail trading cools as hot stocks fade and lockdowns ease Stimulus cheques fail to ignite new surge with consumers saving for holidays and goods

U.S. Growth Stirs Fears of New ‘Taper Tantrum.’ This Time May Be Different. Red-hot U.S. economy draws billions from emerging markets, reviving memories of past investor flight, but developing world entered pandemic stronger

A 28% Tax Rate Will Cost Companies, but Not Equally Tax bills would rise most for U.S.-focused firms that benefited more from 2017 tax cuts, offsetting some gains from stimulus spending.

COVID-19

Recent Analysis

The “AI” or “Aïe, Aïe, Aïe” Year

Jan. 5, 2026

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Fearful April 28, 2025

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THE DAILY EDGE: 5 APRIL 2021

U.S. Added 916,000 Jobs in March as Hiring Accelerated

Jobs Report Might Shift Thinking on Inflation, Yields Economists were caught off guard by March’s strong labor market gains and might need to play catch-up on bond yield forecasts

China looks to rein in lending to cool property boom Small and foreign banks rush to ‘radically’ reduce loans that buoyed Covid recovery

OPEC, Allies Agree to Boost Output, Betting on Demand Rebound OPEC and an alliance of other top oil producers agreed to boost their collective production by more than two million barrels a day over coming months.

US retail trading cools as hot stocks fade and lockdowns ease Stimulus cheques fail to ignite new surge with consumers saving for holidays and goods

U.S. Growth Stirs Fears of New ‘Taper Tantrum.’ This Time May Be Different. Red-hot U.S. economy draws billions from emerging markets, reviving memories of past investor flight, but developing world entered pandemic stronger

A 28% Tax Rate Will Cost Companies, but Not Equally Tax bills would rise most for U.S.-focused firms that benefited more from 2017 tax cuts, offsetting some gains from stimulus spending.

COVID-19

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