Economy in Brief

• IP +0.4% in March; Feb. and Jan. revised up.
• Mfg. IP falls 0.5% (upwardly revised for Feb. and Jan.) w/ durable goods down 0.9% and nondurable goods down 0.1%.
• Utilities output rebounds 8.4%, the largest m/m gain since Jan. ’22, while mining activity falls for the fourth time in five months.
• Consumer goods output gains for the second consecutive month, but business equipment posts the fourth m/m drop in five months.
• Capacity utilization increases 0.2%-pt. to a four-month-high 79.8%; mfg. capacity utilization falls 0.5%-pt. to a three-month-low 78.1%.

• Lower motor vehicle sales & gasoline prices continue to weigh on spending.
• Online sales strengthen again.
• Sales elsewhere are broadly lower.

• Import prices fell 0.6% m/m in March, the largest one-month decline since November 2022 and the eighth monthly decline in the past nine months.
• Excluding fuels, import prices declined 0.5%, their first decline in four months.
• Export prices fell 0.3% m/m, their first decline in three months, due mostly to falling agricultural prices.

• Home prices rise following several months of decline.
• Monthly mortgage payments remain high.
• Mortgage rates ease & income increases.

• Inventories rose in February, offsetting the January monthly decline.
• Business sales were unchanged in February but revised down in January.
• Inventory-to-sales ratio was unchanged.

This week the International Monetary Fund (IMF) trimmed its global growth outlook for this year and flagged downside risks from a potential further flare up of financial instability. Lingering concerns about high inflation and tight labour markets were also emphasised, not least because a further monetary policy response might re-ignite financial market tensions. In our charts this week we pick up on these themes. We look, for example, at one of the factors that’s been driving banking sector stress and specifically the shift away from US bank deposits and into money market funds in recent months (in chart 1). We then turn to the uncomfortable trade-off between the outlook for profits and interest rates that’s recently established itself (chart 2). Next, we look at the equally uncomfortable messaging for global growth from this week’s sentix surveys of investor confidence (chart 3). More comfortable messaging is, however, now being signalled for the inflation outlook via the recent normalisation of supply chain pressures, an issue we assess next (in chart 4). And that messaging chimes too with recent data from Asia and specifically the weakness of China’s producer price inflation and South Korea’s exports (in chart 5). Finally, and in tune with some structural analysis in the IMF’s latest April Economic Outlook, we explore the links between demographics and long-term interest rates (in chart 6).

• Weakness lowers y/y gain to two-year low.
• Core goods inflation is steady; services prices fall.
• Energy prices tumble; food prices rise.

• Initial claims hover just above pre-pandemic amounts.
• Continued weeks claimed edge upward over last several weeks.
• Insured unemployment rate maintains near-record low.