US data was mixed overnight but there was enough good news to reassure markets that weather is the primary cause of the US slowdown and to offset China’s growing problems.
The Philly Fed manufacturing index tanked from 9.4 in January to ‐6.3 this month but the US Flash PMI more than offset that:
February data suggested a solid rebound in U.S. manufacturing business conditions following the slowdown recorded during the previous month. This was highlighted by a rise in the Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™), which is based on approximately 85% of usual monthly replies, from 53.7 in January to 56.7 in February. The latest reading pointed to the fastest overall improvement in U.S. manufacturing business conditions since May 2010.
Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said:
“The flash manufacturing PMI provides the first indications that production has rebounded from the weather – related slowdown seen in January . Having slumped to a three – month low in January the PMI surged to its highest for almost four years in February, as companies reported business returning to normal after freezing temperatures and snow disrupted operations and supply chains.
That was enough it seems because other indicators were largely taper negative. Jobless claims fell marginally but are still stuck and the Cleveland Fed released the median CPI details for January which showed no inflation whatsoever (chart from Calculated Risk):
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.2% annualized rate) in January. The 16% trimmed-mean Consumer Price Index increased 0.1% (1.5% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (1.7% annualized rate) in January. The CPI less food and energy increased 0.1% (1.5% annualized rate) on a seasonally adjusted basis.
Advertisement
Not much cause for tightening there!
Nonetheless, the S&P made another charge at a record high, rising a half percent. Bonds sold off with yields up one percent , gold and the Australian dollar eased a little and the US dollar firmed. Most of it running on the spot but looking forward to a little more taper.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
