The manufacturing ISM showed its third consecutive increase in March. The ISM came out slightly better than expected, rising from 35.8 to 36.3, while an outcome of 36.0 was expected. The breakdown shows a significant improvement in new orders (41.2 from 33.1), but also production (36.4 from 36.3), backlog of orders (35.5 from 31.0), employment (28.1 from 26.1), new export orders (39.0 from 37.5), imports (33.0 from 32.0) and customer inventories (54.0 from 51.0) rose somewhat. Prices paid rose from 29.0 to 31.0. This figure confirms that producers became recently less negative about their business and also the important increase in new orders is an encouraging sign for the coming months.
In March, the ADP employment report showed a decline in employment by 742 000, while the consensus was looking for a drop of 663 000. The previous figure was downwardly revised from -697 000 to -706 000. The details show a decline by 327 000 in goods producing of which 206 000 in manufacturing. In the services sector, employment plunged by 415 000. Assuming that government payrolls are broadly unchanged, the official payrolls might show a job loss of around 750 000, almost 100 000 above the consensus estimate.
In February, pending home sales rose by 2.1% M/M, while a flat outcome was expected. The regional data show a sharp increase in sales in the Northeast and Midwest, while sales dropped significantly in the West. After the upward surprises in earlier released housing data, this outcome adds to hopes that the worst in the housing market is behind us.
EMU: unemployment rate rises to 8.5% in February
In February, the euro zone unemployment rate rose to 8.5%, while the consensus was looking for a figure of 8.3%. The January outcome was upwardly revised from 8.2% to 8.3%. In the coming months, unemployment is expected to rise further as production remains very weak.
The final figure of March manufacturing PMI showed a marginal deterioration compared to the first estimate. The headline index was downwardly revised from 34.0 to 33.9. Looking at the details, both new orders (30.9 from 30.7) and output (33.4 from 33.2) were slightly upwardly revised, while stocks of purchases (36.8 from 37.6) and stocks of finished goods (45.3 from 45.6) were downwardly adjusted. Compared to the previous month, manufacturing PMI showed a slight increase.
Other: UK manufacturing PMI shows unexpected rebound
In the UK, manufacturing PMI rose sharper than expected in March. The headline index rose from 34.7 to 39.1, while a figure of 35.0 was expected. The improvements were broadly based with increases in output, new orders, export orders and employment. Both input and export prices were falling. This unexpected rebound brings UK manufacturing PMI to its highest level since October 2008, but still significantly below the benchmark level of 50.
