The US took a clean left jab with the recent Q1 GDP report. Last night’s Personal Consumption Expenditures report (PCE) was better than I expected and was only a glancing right cross to the the temple:
Personal income increased $50.3 billion, or 0.4 percent, and disposable personal income (DPI) increased $42.5 billion, or 0.4 percent, in March, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $29.6 billion, or 0.3 percent. In February, personal income increased $39.6 billion, or 0.3 percent, DPI increased $29.4 billion, or 0.2 percent, and PCE increased $93.7 billion, or 0.9 percent, based on revised estimates.
Real disposable income increased 0.2 percent in March, in contrast to a decrease of 0.1 percent in February. Real PCE increased 0.1 percent, compared with an increase of 0.5 percent.
Personal outlays and personal saving
Personal outlays — PCE, personal interest payments, and personal current transfer payments — increased $32.3 billion in March, compared with an increase of $96.6 billion in February. PCE increased $29.6 billion, compared with an increase of $93.7 billion.
Personal saving — DPI less personal outlays — was $450.4 billion in March, compared with $440.3 billion in
February. The personal saving rate — personal saving as a percentage of disposable income — was 3.8 percent in March, compared with 3.7 percent in February.
So, real income growth actually rose at a 1.2% annualised pace. Not stellar, but certainly better than February’s fall.
But that’s where the good news ended on the night. The manufacturing ISM is tomorrow but the final two regional reports were dogs.
First the Dallas Fed:
Texas factory activity increased in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 11.1 to 5.6, suggesting growth continued but at a slower pace than last month.
Other measures of current manufacturing conditions stagnated in April. The capacity utilization index came in at 1.4, down markedly from 12.3 in March, with one-quarter of respondents noting decreases. Shipment volumes were flat in April after increasing for the previous three months; the shipments index fell from 8.6 to -0.8. The new orders index posted a near-zero reading for the second consecutive month.
And the Chicago ISM came out with the headline CBB “tumbled”. It was the worst in 29 months:
The Chicago Purchasing Managers reported the April Chicago Business Barometer decreased for a second consecutive month. After five months above 60, the Chicago Business Barometer fell to 56.2, a 29 month low. The index has remained in expansion since October 2009.
BUSINESS ACTIVITY:
• PRODUCTION lowest level since September 2009;
• PRICES PAID down from March’s 7 month high;
• INVENTORIES down in 6 of last 7 months;
• SUPPLIER DELIVERIES lowest since September 2011.
New orders fell from 63.3 to 57.4.
So then, the US manufacturing mini-boom I described last October has played out completely to script. The US recovery now hangs on housing. Better keep 30 year Treasuries down, down, doooown, Ben.
