LIVE MARKETS-Monday data: PMI returns to expansion, residential construction rebounds

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

MONDAY DATA: PMI RETURNS TO EXPANSION, RESIDENTIAL CONSTRUCTION REBOUNDS

Upbeat data from the manufacturing and construction sectors on Monday helped soften the blow of a re-ignited, Trump-style tariff war.

First, activity at U.S. factories expanded this month for the first time since October 2022.

The Institute for Supply Management's (ISM) purchasing managers' index (PMI) USPMI=ECI improved more than analysts expected, rising 1.7 points and leapfrogging over the 50 level, the barrier separating monthly contraction and expansion.

Line-by-line, new orders improved, production, employment and imports flipped into expansion.

On the less-sunny side, inventories (a significant drag on Q4 GDP) worsened, and prices paid - an inflation predictor - gained some heat.

Noting that this survey was conducted before "President Trump unilaterally initiated a trade war with the United States' largest trading partners," Carl Weinberg, chief economist at High Frequency Economics writes "critical sectors of the economy face existential threats from the Trump tariffs and likely retaliation."

Commentary from survey participants suggested tariff uncertainties are beginning to cloud otherwise optimistic outlooks.

Here's a breakdown of select PMI components:

Not to be outdone, S&P Global released its final take on January manufacturing PMI USMPMF=ECI, which was upwardly revised to 51.2, gaining 1.1 points from its initial "flash" iteration.

"Manufacturers report that political uncertainty has cleared and the pro-business approach from the new administration has brightened their prospects," says Chris Williamson, chief business economist at S&P Global. "However, a rise in the rate of increase of both input costs and selling prices could become a concern if this intensification of inflationary pressures is sustained in the coming months."

ISM and S&P Global PMIs differ in the weight they apply to their index's subcomponents (new orders, employment, etc).

Here's how closely the dueling indexes agree (or not).

Finally, outlays on U.S. construction USTCNS=ECI increased by 0.5% in December, according to the Commerce Department, a more robust gain than the 0.2% economists predicted.

Digging below the headline number, spending on residential projects roared back to life, rising 1.5%. Non-residential spending dropped 0.2%.

Expenditures on private projects rose 0.9%, while a 0.5% decline in government construction spending held gains in check.

The glass-half-empty crowd will note that all this economic good news "could be taken negatively because it gives the Fed another reason not to cut rates any time soon," says Sam Stovall, chief investment strategist of CFRA Research

(Stephen Culp)

FOR MONDAY'S EARLIER LIVE MARKETS POSTS:

NASDAQ SLIDES AS TRUMP LEVIES TARIFFS, AS PROMISED - CLICK HERE

TRADERS CHECK THEIR CHARTS AS THEY BRACE FOR ANOTHER MONDAY MORNING ROUT - CLICK HERE

DRINK UP! TARIFF IMPLICATIONS FOR EUROPE'S BEVERAGE MAKERS - CLICK HERE

WHAT IF THE U.S. REAL TARGET IS JUST CHINA? - CLICK HERE

MEANWHILE, EARNINGS REMAIN REASSURINGLY CALM - CLICK HERE

SOME SIMULATIONS ON POSSIBLE FOREX MOVES - CLICK HERE

TRUMP TARIFFS SEND STOXX LOWER; AUTOS SECTOR LAGS - CLICK HERE

EUROPE BEFORE THE BELL: TRADE WAR UNDERWAY - CLICK HERE

TRUMP TARIFF REALITY UNNERVES MARKETS - CLICK HERE