LIVE MARKETS-April fools' data: Retail sales, ADP, PMI, et al

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

APRIL FOOLS' DATA: RETAIL SALES, ADP, PMI, ET AL

Investors were subjected to an onslaught of disparate economic indicators on Wednesday, much of it good, some of it not.

Kicking things off with good news about the consumer: receipts at U.S. retailers USRSL=ECI rebounded in February, rising 0.6% after dipping 0.1% in January. The number was a tad stronger than the 0.5% growth analysts anticipated.

Drilling deeper into the data, 1.0% declines in groceries and food/beverages were offset by a pleasant 1.2% increase in motor vehicles/parts. The battered department segment showed a welcome 3.0% gain in store receipts, but remains down 5.4% year-over-year. Non-store retail sales, which include online shopping, rose 0.7%.

The 0.9% increase in spending at the gas pump predates the war on Iran, which has hobbled global crude supply and sent gasoline prices soaring since then.

"The big question from here is: how resilient will U.S. households be amid the latest shock in spending power?" asks James McCann, senior economist at Edward Jones. "Soaring gas prices are putting pressure on household budgets while sizeable declines in consumers' bond and equity portfolios in March could sap confidence too."

"In response we should see some hit to March and April retail spending," McCann adds.

The "control" figure, which excludes autos, gasoline, building supplies and food services - and is most closely correlated with the personal expenditures element of GDP - gained 0.5%, more robust than the 0.3% consensus.

Moving to the labor market, the private sector added 62,000 jobs in March, or 22,000 more than economists projected, according to payrolls processor ADP.

Yet while ADP has a sketchy track record as a predictor of official government data, the number is softer than the private payrolls increase of 70,000 expected from the Labor Department's more comprehensive jobs report, which is due on Friday, a market holiday.

The report "offsets the softer signal from yesterday’s JOLTS report, pointing to a labor market that’s cooling gradually – not cracking," says Matthew Martin, senior economist at Oxford Economics. "Both predate the U.S./Israel-Iran conflict, which we expect will weigh on hiring via delays and reduced demand."

The graphic below tracks ADP's NEI and measures its accuracy (or lack thereof) relative to Labor Department data.

The Institute for Supply Management's (ISM) purchasing managers' index (PMI) USPMI=ECI showed U.S. factory activity expanded at a slightly accelerated pace last month.

The index gained 0.3 points to print at 52.7, surpassing the expected 0.1 point rise.

ISM's manufacturing PMI now sits north of the magic PMI level of 50, the dividing line between monthly contraction and expansion.

Wandering into the weeds, new orders weakened and employment remained in contraction land, but production picked up steam. Prices paid - an inflation predictor - heated up by 2.8 points to a scorching-hot 78.3, the highest that component's been since June 2022.

"This month also marks the first report with panelists citing the Iran war as a new impact to their business, along with ongoing uncertainty with U.S. economic policy," says Susan Spence, chair of ISM's manufacturing business survey.

For its part, S&P Global issued its final take on March manufacturing PMI USMPMF=ECI, which printed at 52.3, ever so slightly weaker than its initial "flash" reading of 52.4, but 0.7 points stronger than its final February number.

"This sustained resilience in part reflects reduced concerns over government policies such as tariffs, but also indicates that producers anticipate only a short-term and modest impact from the war, which is clearly uncertain," writes Chris Williamson, S&P Global's chief business economist.

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 they agree (or not). The dueling PMIs will visit the services side of the coin on Friday (S&P Global) and Monday (ISM).

Turning to the housing market, the cost of financing home loans jumped to the most expensive level since August, according to the Mortgage Bankers Association (MBA).

Borrowers, particularly would-be refi applicants, weren't terribly excited about that development.

The average 30-year fixed contract rate USMG=ECI - which tends to rise and fall in tandem with benchmark Treasury yields - jumped 14 basis points to 6.57%.

As a result, demand for loans to purchase homes USMGPI=ECI - among the housing market's most forward-looking indicators - soured by 2.6%. But applications to refinance existing mortgages USMGR=ECI, which accounted for a diminishing 45.3% of the total, tumbled 17.3%.

The 30-year fixed rate "is up half a percentage point from just one month ago," notes Mike Fratantoni, MBA's chief economist. "The shocks of the jump in rates and the increase in overall economic uncertainty are likely having an impact on buyer confidence."

The 30-year fixed rate currently sits 13 basis points below where it was during the same week a year ago.

Over that same period, purchase applications have increased by 0.8%, while refi demand has risen by 33.2%.

And finally, in ancient history news, business inventories USBINV=ECI unexpectedly dropped by 0.1% in January. Economists predicted a 0.1% move in the other direction.

(Stephen Culp)

EARLIER ON LIVE MARKETS:

US STOCKS RISING FOR SECOND DAY ON HOPES OF IRAN CONFLICT RESOLUTION CLICK HERE

FROM GROWTH TO DEFENSE: HOW 2026'S MARKET TURMOIL IS RESHUFFLING THE FACTOR RACE CLICK HERE

BUT WHAT ABOUT THE DIFFICULT QUESTIONS? CLICK HERE

TIME TO BUY? CLICK HERE

GOLDMAN DIMS CHANCES OF FED HIKES DESPITE OIL JITTERS CLICK HERE

STOXX 600 JUMPS, STARTS APRIL ON A HIGH NOTE CLICK HERE

EUROPE BEFORE THE BELL: FUTURES UP ON GROWING HOPES OF IRAN WAR ENDING SOON CLICK HERE

APRIL FOOLS RUSH IN CLICK HERE