Macro View
Daily Insights
- Small business optimism remains at highs. While the NFIB Small Business Index, a measure of business trends and owners’ confidence, registered a marginal gain month over month in April, confidence remains at record highs. Survey participants reported record growth in profits on the heels of improving operating productivity and stronger sales, which underpinned increasing expectations to boost capital expenditures and hire additional workers; although, the biggest problem cited was finding qualified workers. In aggregate, the data suggest small business owners remain optimistic about the economy.
- Producer price inflation ticks higher. Producer Price Index (PPI) data released this morning showed price inflation measured at the wholesale level rose 0.1% in April versus a 0.3% increase in March (a 0.3% increase was expected). The shortfall can mostly be attributed to declining food costs with the Core PPI, which excludes food and energy, increasing 0.2%; however, the deceleration is likely temporary as energy and other commodity prices have been rising recently. The data also continues last week’s trend of not-too-hot and not-too-cold, which should keep the Federal Reserve on its current rate-hike path.
- JOLTS report signals greater challenges in filling open positions. The Job Opening and Labor Turnover Survey (JOLTS) for March confirmed the overall picture of a healthy job market but with increased difficulty filling positions. Job openings rose to a record high, while the hire-to-openings ratio hit a record low. The quit rate, which reflects the availability of improved opportunities for those currently employed, remains near the high for both the current and prior expansion. The U.S. labor market remains in a sweet spot, with strong job growth accompanied by only modest wage pressure, but we continue to watch for signs that wage pressures may be increasing.
- Oil gets boost after U.S. exits Iran deal. Though generally expected, the combination of this news and Tuesday’s bullish private inventory data have pushed WTI crude oil prices up almost 3% overnight to new three-year highs at $71. Though oil continues to garner support as markets price in fewer Iranian exports amid an improved global supply-demand backdrop, booming U.S. production, the ability of the Saudis to fill the Iran-related global production gap, and the fact that the U.S. is acting unilaterally, all suggest the oil rally may be due for a pause. Technical momentum keeps us neutral but a price over $70 reflects a potentially overly bullish set of assumptions.
Monitoring the Week Ahead
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Wednesday
Thursday
- CPI (Apr)
- UK: Trade Balance (Mar)
- UK: GDP estimate (Apr)
Friday
- Import & Export Price Indices (Apr)
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