US ECONOMY & POLITICS

U.S. Business Activity Rebounds to Eight-Month High, Costs Rise – Bloomberg, 3/24/2022

• U.S. business activity advanced to an eight-month high in early March as fewer Covid-19 restrictions and less severe supply chain disruptions supported demand and production.
• The S&P Global flash U.S. composite purchasing managers index, formerly known as the IHS Markit PMI, increased 2.6 points to 58.5, the group reported Thursday.
• The report also showed a measure of input prices accelerated to a near-record 76.8, further fanning inflationary pressures. Selling price inflation eased slightly in the month, though remains elevated.
• The group’s manufacturing index rose to a six-month high in March, reflecting stronger growth in output, new orders and employment. Meantime, delivery times lengthened at the slowest rate since January 2021.
• The gauge of services activity advanced to the strongest level since July, driven by a sharp increase in new business.
• Robust demand at both manufacturers and service providers helped drive the overall measure of backlogs to the highest in data back to 2009.

U.S. Jobless Claims Fall to 187,000, Lowest Level Since 1969 – Wall Street Journal, 3/24/2022

• New applications for unemployment benefits in the U.S. fell last week to a fresh half-century low as employers held on to their workers in the midst of a labor shortage.
• Initial jobless claims, a proxy for layoffs, decreased by 28,000 to a seasonally adjusted 187,000 last week, the Labor Department said Thursday.
• That was slightly below a level last seen in December, and the lowest level for initial claims in over 52 years, since September 1969.
• The four-week average, which smooths out volatility in the numbers, decreased by 11,500 to 211,750.
• Continuing claims, a measure of the total number of people on the unemployment rolls through regular state programs, moved down to 1.35 million for the week ended March 12 from 1.42 million the previous week.
• That was the lowest level since January 1970, a time when the labor force was roughly half as large as it is today.
• Continuing claims are reported with a one-week lag.

Fed’s Evans Says He’s ‘Open’ to Half-Point Interest-Rate Hike – Bloomberg, 3/24/2022

• Federal Reserve Bank of Chicago President Charles Evans said he’s “comfortable” with raising interest rates by quarter percentage-point increments, while being “open” to a bigger 50 basis-point move if needed.
• “We want to be careful, we want to be humble and nimble, and get to neutral before too long — maybe 50 helps, I’m open to that,” Evans said in answering a question after a Thursday speech to the Detroit Regional Chamber. “I would be comfortable with each meeting increasing by a quarter point.”
• Investors have boosted bets on a half-point move at the FOMC’s May 3-4 meeting, after Chair Jerome Powell said Monday that the central bank was prepared to take such a step if necessary to control the hottest price pressures in four decades.

U.S. housing costs should play role in guiding Fed policy, Waller says – Reuters, 3/24/2022

• The state of the U.S. housing market should help guide the Federal Reserve as it sets monetary policy and there appears no let-up in sight for higher home costs, Fed Governor Christopher Waller said on Thursday.
• “With housing costs gaining an ever-larger weight in the inflation Americans experience, I will be looking even more closely at real estate to judge the appropriate stance of monetary policy,” Waller said in prepared remarks for a webinar on housing organized by Tel Aviv University and Rutgers University.
• He noted that real estate comprises a big share of key inflation gauges as well as making a sizeable contribution to gross domestic product.
• Measures of market rent have risen more than 6.5% over the past two years while house prices are up a cumulative 35% since the beginning of the COVID-19 pandemic, according to the Zillow Home Value Index.
• Waller also said he hoped some pandemic-specific factors pushing up home prices and rents would ease in the next year or so, but cautioned that overall rising costs in the “red-hot” housing market are due to demand far exceeding supply and are not fueled by excessive leverage or easy lending.

U.S. Renews Tariff Exemptions for Some Chinese Imports – Wall Street Journal, 3/24/2022

• The Biden administration said Wednesday that it will renew tariff waivers for 352 categories of goods from China after previously granted exemptions expired.
• The items that will be exempted include certain kinds of bicycle parts, electric motors, machinery, chemicals, seafood and duffel bags.
• The Biden administration conducted a review of 549 categories of goods for which waivers were sought, and on Wednesday the U.S. Trade Representative’s office said it had granted 352 exclusions while denying the rest.
• Wednesday’s decision will have a relatively small impact on the tariffs overall. The tariffs imposed in 2018 and 2019 covered more than $350 billion a year worth of trade, and companies had filed more than 53,000 requests for tariff relief.

U.S. Hits Russian Lawmakers, Defense Sector With New Sanctions – Bloomberg, 3/24/2022

• The U.S. announced a new package of sanctions on Russian elites, lawmakers and defense companies, punishments designed to ramp up pressure on Moscow over its invasion of Ukraine.
• The measures announced Thursday during summit meetings between President Joe Biden and NATO, as well as the Group of Seven, will be followed by others to reduce Europe’s reliance on Russian oil and gas — the lifeblood of the nation’s economy, according to senior administration officials.
• The U.S. will impose full blocking sanctions on more than 400 individuals and entities, including the Duma, Russia’s lower house of parliament, and 328 of its members, more than a dozen Russian elites and 48 Russian defense companies.
• Among the defense companies being sanctioned are Russian Helicopters, Tactical Missiles Corporation, High Precision Systems, NPK Tekhmash OAO and Kronshtadt, according to the White House.
• An agreement with European Union countries to reduce their dependence on Russian energy sources is expected to be announced Friday, according to a senior administration official, who declined to detail the measures.

EUROPE & WORLD

World Economy Set to Slow on War’s ‘Strong Headwinds,’ UN Says – Bloomberg, 3/24/2022

• Russia’s invasion of Ukraine will act as a drag on the world economy, with developing countries at particular risk, the United Nations warned.
• Global growth will probably ease to 2.5% in 2022 following last year’s 5.6% surge, the UN Conference on Trade and Development said Thursday in a report.
• UNCTAD sees a deep recession in Russia and “significant” slowdowns across Western Europe and most of Asia.
• While soaring food and fuel prices will increase hunger and hardship for people in poorer nations, everyone will ultimately experience reduced purchasing power, it said.
• Poorer nations may soon face a perfect storm of slowing global demand, interest-rate hikes in advanced economies and high levels of pandemic-era debt that risk a “downward spiral of insolvency, recession and arrested development,” according to the report.

Euro zone March business growth strong but outlook darkens -PMI – Reuters, 3/24/2022

• Euro zone business growth was stronger than expected this month, a survey showed on Thursday, although prices rose at a record pace, likely adding to pressure on the European Central Bank to raise interest rates.
• S&P Global’s Flash Composite Purchasing Managers’ Index, seen as a good gauge of overall economic health, slipped to 54.5 in March from 55.5 in February although it was comfortably above the median 53.9 forecast in a Reuters poll.
• A PMI covering the bloc’s dominant service industry fell to 54.8 this month from 55.5 but was ahead of the Reuters poll estimate for 54.2.
• The manufacturing PMI dropped to 57.0 from 58.2 but was ahead of expectations for 56.0.
• The output prices index jumped to 65.7 from 62.3 suggesting inflation, already a record 5.8% in February, has further to climb.
• The factory future output index plummeted to 53.8 from 68.5, its lowest reading since May 2020 – not long after the coronavirus pandemic began.
• Activity in Germany, Europe’s largest economy, dipped this month as output price inflation hit a new record high and the war in Ukraine impacted demand as well as supply chains, earlier data showed.
• But French business activity accelerated unexpectedly to an eight-month high as easier COVID restrictions boosted the service sector and eclipsed concerns about the Ukraine crisis’ impact on manufacturing.
• In Britain, outside the common currency area, the private-sector services PMI hit its highest in nine months but manufacturing output was reported at its lowest in five months.

Russian Stock Market Jumps With Foreign Investors Blocked From Selling – Wall Street Journal, 3/24/2022

• Russia’s stock market jumped in its first, limited trading session since the West unveiled punishing sanctions nearly a month ago, but the rally was overshadowed by government moves to prevent foreign investors from selling shares.
• The benchmark MOEX index rose around 4%.
• Only 33 shares out of 50 on the index were allowed to trade in the shortened session.
• Russian energy giant Gazprom PJSC rose 13%, while its peer Lukoil PJSC rose 12%.
• Russian bank stocks were mixed despite being the target of sanctions. VTB Bank PJSC fell 5.5%.
• Sberbank Russia PJSC rose 3.9%.
• The resumption of trading is unlikely to be interpreted as a sign that all is well with the Russian economy.
• To prevent a steep selloff, Russia’s central bank banned short selling, where investors bet that a stock’s value will decline, and blocked foreigners, who make up a huge chunk of the market, from selling their shares.
• The Kremlin also directed a Russian sovereign-wealth fund to buy around $10 billion in shares.

Factmonster – TODAY in HISTORY

• Queen Elizabeth I died at age 69 after ruling England for more than 40 years. 1603
• Robert Koch announced the discovery of the tuberculosis bacillus. 1882
• In one of worst oil spills in recent history, the tanker, Exxon Valdez, ran aground and released 240,000 barrels of oil into Prince William Sound. 1989
• NATO begins launching air strikes in an attempt to force Serbia to cease hostilities against ethnic Albanians in Kosovo. 1999