The week in review

• U.S. PPI: +1.0% m/m, +4.2% y/y
• Initial jobless claims at 744k

The week ahead

• Core CPI
• Retail sales

Thought of the week
Recent economic data are showing signs that the U.S. is recovering more quickly from the pandemic than expected. Nowhere is that more notable than in last week’s PMI numbers. As illustrated in the chart, the U.S. recorded a strong March ISM manufacturing index of 64.7, far surpassing the consensus expectation of 61.5. This 37-year record high is a reflection of robust manufacturing activity driven by strong growth in orders, production and employment, along with increases in prices paid for inputs. The services index also had a stellar March, coming in at 63.7, +8.4% from February, with all 18 service industries exhibiting growth. Previously lagging behind manufacturing, the service sectors appear to finally be catching up. Service sector growth is likely to remain elevated due to pent-up demand, stimulus checks and increased optimism as vaccines are distributed. Internationally, PMIs also painted an optimistic picture, with the J.P. Morgan global composite output PMI coming in at 54.8, a remarkable improvement from its April 2020 low of 26.2. Despite vaccine rollout challenges and further lockdowns, the eurozone composite PMI moved further into expansionary territory at 53.2. China’s composite PMI was also expansionary at 53.1, although it remained lower than at the end of 2020 due to new COVID-19 restrictions. With economic global growth clearly beginning to accelerate, investors may want to consider making portfolio adjustments that recognize the opportunities and challenges presented by a more rapid recovery.

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