US Easter Data Wrap: US Leading Indicators Surge In March

Saxo Bank | Apr 22, 2014 06:43AM ET

Traders may have kicked back during the Easter break but the holiday offered its fair share of economic data nonetheless. Not least, the US was active during the Easter break, with several interesting if not overly important numbers released. US: Leading indicators rose a robust 0.8 percent m/m in March (+0.7 percent expected) following a strong increase of 0.5 percent in February. As we have come to expect, the interest rate spread added significantly to the overall index, this time, 0.3 percentage points (pp). However, the average workweek (0.3pp) and initial jobless claims (0.2pp) also contributed significantly. The most negative contributor was building permits, which subtracted 0.1pp due to a 2.4 percent monthly decline to 990,000 permits last month.

The overall increase in the index of 0.8 percent in March meant that the yearly change rose from 5 percent to 6.1 percent, the highest rate of change since July 2011. This seems to corroborate my view that the US economy will accelerate to (a bit below) 3 percent this year from 1.9 percent in 2013. Initial jobless claims were also reported, and rose slightly to 304,000 from an upward revised 302,000 beating consensus (315,000) handsomely. This saw the four-week moving average fall from 317,000 to 312,000, the lowest since August 2007. Even more crucially, last week's report covers the survey week for nonfarm payrolls (released next Friday, May 2) and points to another robust employment report. It is worth bearing in mind, however, that the relationship between these two series is noisy and that more labour-related data will be released ahead of the Employment report, including ISM manufacturing and ADP Employment.

The April version of the Philadelphia Fed Business Outlook was also released, jumping to 16.6 from 9 earlier and 10 expected, with new orders and shipments both strong. The former rose from 5.7 to 14.8, the highest since October of last year, while shipments printed 22.7, and we have to go back to March 2011 to find a better number than that. The number of employees sub-index also rose a bit from 1.7 to 6.9 and the workweek index hit 5 from 3.1. All in all, a good report from Philadelphia although we should not put too much emphasis on the regional surveys.

Lastly, the Chicago Fed National Activity index was released, falling to 0.2 in March (as expected by consensus) from 0.53 in February. It is worth keeping in mind though that February was revised up heavily from just 0.14 initially. The three-month moving average rose to 0 from -0.14, suggesting that the US economy grew at around trend pace in the first quarter. This index should only serve as a rough proxy of GDP and analysts are more sceptical of Q1 growth. Next Wednesday (April 30) the first estimate of Q1 GDP will be reported and consensus currently expects it to show growth of 1 percent quarter-on-quarter at an annualised rate.

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Written By: Saxo Bank

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