9:45a PMI CompositeFlash:
Composite – Level 54.3 vs 55.8 prior
Manufacturing – Level 52.5 vs 53.7 prior
Services — Level 54.8 vs 56.2 prior
Highlights
A weak set of PMIs won't have anyone double guessing the Federal Reserve's dovish policy meeting this week. The composite PMI, at 54.3 for the March flash and a 6-month low, missed Econoday's consensus by a sizable 1.2 points as both services at 54.8 and manufacturing at 52.5 similarly missed their targets.
The PMI's manufacturing sample is reporting the weakest conditions in nearly two years with growth in new orders the softest since April 2017 which is holding down employment to the lowest growth rate since June 2017. Cost inflation is at a 2-year low with selling prices showing the least traction since October 2017. None of this helping the sample's optimism which is the weakest since June 2016.
The service side of the report is doing better than manufacturing but is still slowing including new orders and employment.
Today's report isn't citing any particular factors, just that overall demand appears to have slowed at quarter end. Still, readings are above 50 to indicate growth though slower growth compared to the last couple of years.
10:00a Existing-home sales at 5.51 million seasonally adjusted annual rate in February, National Association of Realtors says
Existing Home Sales - Level - SAAR 5.510 M actual vs 4.930 M(rev) prior
Existing Home Sales - M/M Change 11.8% actual vs-1.4% (rev) prior
Existing Home Sales - Yr/Yr Change -1.8% actual vs -8.7% (rev) prior
Highlights
Averages aren't needed to find the good news in February existing home sales, jumping 11.8 percent to a 5.510 million annual rate that tops Econoday's consensus range. A rebound in the West, where sales had been depressed due in part to wild fires late last year, helped February's results though sales also rebounded in the South.
Single-family resales, up 13.3 percent to a 4.940 million rate, were especially strong in the month which is especially good news for the housing sector in general. Condo sales were flat at a rate of 570,000.
Supply is coming into the market which is more good news, up 2.5 percent in the month to 1.630 million. Yet given the surge in sales, supply relative to sales actually fell sharply to a very lean 3.5 months from January's 3.9 months. Hopefully the pick up in sales will drive new resales into the market.
Price data are steady, up marginally for the median to $249,500 with, however, the year-on-year rate, at plus 3.6 percent, looking slightly overpriced relative to sales which, despite February's big jump, are still down 1.8 percent.
Turning back to regional data, February sales in the West shot 16.0 percent higher to a 1.160 million rate though are still down 7.9 percent year-on-year which is a reminder that price growth in the region, which had been rising at a double digit pace for most of the last two years, has turned dead flat. Monthly sales in the South rose 14.9 percent to a 2.390 million rate with the Midwest also posting a sizable gain, of 9.5 percent to a 1.270 million rate.
Data on new home sales have not been as strong as this report but still look respectable and, together with today's data, should ease the pessimism for a sector that held down the 2018 economy.
10:00a Wholesale Trade - Inventories M/M change 1.2% vs 1.1% prior
Highlights
There are few indications of economic slowing that are more convincing than an unwanted build in inventories -- and that apparently is what's underway in the wholesale sector. Wholesale inventories jumped 1.2 percent in January to far exceed anyone's expectations and are up 7.7 percent year-on-year. Confirmation that this is unwanted comes from sales in the sector which did rise 0.5 percent in January but follow a long stretch of contraction. Year-on-year, sales are up only 2.7 percent. The sector's stock-to-sales ratio continues to climb, at 1.34 vs 1.33 in December and against 1.28 in January last year. Today's data confirm the wisdom of the Federal Reserve's cautious outlook.
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