Succinct summation of week’s events:
Positives:
1) Payrolls in Feb and March are revised higher, led by the private sector and offsets April weakness. Avg duration of unemployment while still high, falls to 1 yr low.
2) Initial Jobless Claims end 3 week run above 380k and total 14k less than expected at 365k.
3) ISM mfr’g surprises to upside, especially in light of regional weakness, at 54.8 vs 53.4 in Mar and est of 53. Best since June ’11.
4) Vehicle sales hang in above 14mm for 4th straight month.
5) Q1 Home Ownership rate falls to 65.4%, back to the 57 year average, things normalizing, renting helps create more dynamic, mobile, flexible economy.
6) RBAustralia cuts rates an unexpected 50bps. Having conducted one of the most stable monetary policies (kept rates above rate of inflation) over the past 30 yrs, they have room to maneuver.
7) Spanish and Italian bond yields fall.
Negatives:
1) April Payrolls rise only 115k, 130k of which from the private sector. Participation rate falls to lowest since 1981, household survey declines as does size of labor force, avg hourly earnings flat m/o/m and up just 1.8% y/o/y, still below the rate of inflation.
2) ISM services in April falls to lowest since Dec at 53.5 vs 56 in March.
3) Retail comps in April miss expectations (weather give back?) .
4) Spain’s economy as expected officially back in recession.
5) German unemployment unexpectedly rises in April.
6) Euro zone mfr’g and services composite index revised to 6 month low.
7) UK mfr’g and services indices also fall to multi month low.
8) Euro zone CPI up 2.6% y/o/y vs 2.7% in March, above estimate of 2.5% and higher than 2% ECB target rate for 17 straight mo’s.
9) Spanish and Italian stocks trade lower again.
10) China’s PMI services index falls to 3 month low and while mfr’g PMI up at best since Mar ’11, was slightly softer than expected.
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