Soft Economic Data to Round Out the First Quarter

U.S. Review

Soft Economic Data to Round Out the First Quarter

• Existing home sales posted a better-than-expected 6.1 percent rise in March, which should provide some support to residential investment in Q1. The report also showed that inventories were beginning to tighten, which could further support further home price appreciation.
• New home sales reversed course in March, declining 11.4 percent after climbing 5.6 percent in the prior month.
• Durable goods orders rose 4.0 percent in March; however,excluding transportation goods, orders fell 0.2 percent. The report reflected the ongoing headwinds in manufacturing of slower global growth and a strong U.S. dollar.

Global Review

Signs of Positive, Albeit Modest, Foreign Growth

• The Chinese central bank reduced its required reserve ratio for major central banks this week, and further easing of macroeconomic policies seems likely in coming months. The slowdown in China appears to be exerting a restraining effect on economic growth in Korea.
•  The manufacturing and service sector PMIs in the Eurozone edged lower in April, but they both remained in expansion territory. Foreign economic growth remains positive, but it does not appear to be strong enough at present to lead to a significant rise in global inflationary pressures.