LIVE MARKETS-Whistling past the graveyard: PMI, jobless claims, layoffs, construction spending

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WHISTLING PAST THE GRAVEYARD: PMI, JOBLESS CLAIMS, LAYOFFS, CONSTRUCTION SPENDING

A pile of indicators on Thursday was tossed atop a growing pile of data suggesting the U.S. economy, though in fairly good shape, is showing the strain of trade-related uncertainty.

The contraction of U.S. factory activity accelerated in April.

The Institute for Supply Management's (ISM) purchasing managers' index (PMI) USPMI=ECI edged down 0.3 points to 48.7, just a bit stronger than the 48.0 consensus.

A PMI print south of 50 indicates monthly contraction.

Wandering into the weeds, new orders, production and employment remained below that level and imports - perhaps unsurprisingly - dipped below it.

Prices paid - an inflation predictor - heated up by 0.4 points to 69.8, its highest reading since June 2022. This is a worrisome development for those watching for inflationary effects of the tariff chaos.

"The decline in the ISM manufacturing index was not as large as expected, but the signal remains bleak," Matthew Martin, senior U.S. economist at Oxford Economics. "Respondents' comments were rife with tariff troubles, noting weaker demand, higher prices, and supply chain disruptions."

Not to be outdone, S&P Global also released its final take on March manufacturing PMI USMPMF=ECI, which repeated the 50.2 final March reading, still clinging to expansion by its fingernails.

The S&P Global and ISM indexes differ from each other in the weight they apply to the various components (new orders, employment, etc.).

Here's how closely the dueling PMIs agree (or not):

Last week, 241,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, an 8.1% weekly increase, and 17,000 more than analysts expected.

It was the highest initial jobless claims reading since February, but bouncing around within that 200,000 to 250,000 range associated with healthy labor market churn.

But how long will that last?

"We have been waiting for a break in the labor market consistent with the declines we have been seeing in activity indicators," writes Carl Weinberg, chief economist at High Frequency Economics. "We believe firms have been 'hoarding' workers to make sure they don’t lay off skilled and trained workers by mistake, especially with the labor market still very close to full employment."

A separate report from executive outplacement firm Challenger Gray & Christmas (CGC) USCHAL=ECI showed that in April, corporate America announced it would lay off 105,441 workers, down 61.7% from March.

But it's a 64.7% increase over a year ago, and the highest April reading since 2020, the height of the COVID panic.

So far this year corporate America has announced 602,493 job cuts, the highest January-April total since 2020 and marking an 87% year-over-year surge.

Massive job cuts ordered by billionaire Elon Musk's Department of Government Efficiency this year accounted for nearly 46.8% of total layoff announcements so far this year.

"Though the Government cuts are front and center, we saw job cuts across sectors last month," writes Andrew Challenger, workplace expert at CGC. "Employers are slow to hire and limiting hiring plans as they wait and see what will happen with trade, supply chain, and consumer spending,”

Ongoing jobless claims USJOBN=ECI, reported on a one-week lag, jumped by 4.5% to 1.916 million, topping the consensus 1.864 million analysts expected. Elevated continuing claims support recent consumer survey data suggesting laid off workers are finding it increasingly difficult to find a replacement gig.

Finally, expenditures on construction projects USTCNS=ECI unexpectedly dipped in March, dropping 0.5% in defiance of the 0.2% growth economists predicted.

Delving deeper into the Commerce Department's data, spending on residential projects dipped 0.4%, with outlays on private- and government-funded projects dipping 0.6% and 0.2%, respectively.

(Stephen Culp)

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