Market movers today
In the US, PMI manufacturing for March is due out today. Given that Markit PMI was significantly below the level suggested by ISM and Empire in February, one could be tempted to call for an increase in PMI manufacturing in March in order to close part of this gap. However, it is worth keeping in mind that manufacturing activity has been increasing since last summer, partly on the back of a recovery in the oil market. Without further increases in the oil price, the given level is probably as high as we are going to get. Also, there are signals of a deceleration in economic growth in Q2 this year, which should also cap growth in the manufacturing sector. Thus, we expect manufacturing PMI to stay around the current level. This continued improvement in manufacturing should also spill over into core capital goods orders for February, which is due out today as well. Both new orders and value of shipments bottomed out in mid-2016 and we expect them to move higher in coming months.
Today, PMI figures for the euro area are due out. Overall, we expect PMIs to remain strong as we saw rising Ifo expectations in February and a moderate increase in the ZEW expectations in March, which has been good at leading the PMI figures historically. However, it should be noted that economic expectations have risen after the good news from the PMIs and other economic surveys, making it less likely that we will see further upside surprises. This also reflects that data moves in cycles and that some moderation is likely after a period of strong data.
There are no market movers in Scandi today.
Selected market news
The announcement of the EUR233bn take-up on the fourth and final ECB TLTRO II had limited market impact.
US stock markets fell back slightly as yesterday’s vote in the US House of Representatives on the American Health Care Act (Trumpcare), which is to replace Obamacare, was postponed.
New home sales in the US climbed to a seven-month high of 592,000 in February from 558,000 in January, which indicates a modest effect on the US residential real estate market from the recent increase in borrowing costs.
In the UK, retail sales figures were released yesterday. Although retail sales excluding fuels came out strong in February (+1.3% m/m), they have been weak in recent months. Looking at 3M/3M, retail sales have declined 1.25%. Overall, retail sales data supports our view that growth is slowing, as higher consumer prices hit real wage growth and hence private consumption.
