Author: Consultant

Private sector employment in the U.S. increased by more than expected in the month of March, according to a report released by payroll processor ADP on Wednesday.

ADP said private sector employment jumped by 155,000 jobs in March after climbing by an upwardly revised 84,000 jobs in February.

Economists had expected private sector employment to grow by 105,000 jobs compared to the addition of 77,000 jobs originally reported for the previous month.

“Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors,” said ADP chief economist Nela Richardson.

The report said the manufacturing sector delivered stronger-than-average job gains for the second straight month, adding 21,000 jobs.

Meanwhile, ADP said construction hiring slowed, while the natural resources and trade, transportation, and utilities sectors lost jobs.

ADP also said year-over-year pay gains slowed to 4.6 percent for job-stayers and to 6.5 percent for job-changers. The1.9 percentage point pay premium for job-changers matches a series low last seen in September.

On Friday, the Labor Department is scheduled to release its more closely watched report on employment in the month of March, which includes both public and private sector jobs.

Economists currently expect employment to increase by 140,000 jobs in March after climbing by 151,000 jobs in February. The unemployment rate is expected to remain unchanged at 4.1 percent.

A report released by the Energy Information Administration on Wednesday unexpectedly showed a sharp increase by U.S. crude oil inventories in the week ended March 28th.

The EIA said crude oil inventories surged by 6.2 million barrels last week after slumping by 3.3 million barrels in the previous week. Economists had expected crude oil inventories to decrease by 2.0 million barrels.

Nonetheless, at 439.8 million barrels, U.S. crude oil inventories remain about 4 percent below the five-year average for this time of year, the report said.

The report also said distillate fuel inventories, which include heating oil and diesel, crept up by 0.3 million barrels last week but are about 6 percent below the five-year average for this time of year.

Meanwhile, the EIA said gasoline inventories decreased by 1.6 million barrels last week but remain 2 percent above the five-year average for this time of year.

The price of crude moved to the downside during trading on Tuesday, giving back ground after surging to its highest closing level over a month on Monday.

After spiking $2.12 or 3.1 percent to $71.48 a barrel in the previous session, crude for May delivery fell $0.38 or 0.5 percent to $71.10 a barrel.

The pullback by the price of crude oil came as traders await U.S. President Donald Trump’s reciprocal tariffs announcement on April 2 to assess the impact on fuel demand.

A report from the Washington Post this morning said White House aides have drafted a proposal to impose tariffs of around 20 percent on most imports to the U.S.

However, the Washington Post noted White House advisers cautioned that several options are on the table and no final decision has been made.

Concerns over tighter global supply also remained in focus after Trump threatened Russia with tariffs and vowed to continue strikes on Yemen’s Houthi rebels until they no longer pose a threat to global shipping.

He also issued a stern warning to Iran, stating that the “real pain is yet to come.”

Iran’s Supreme Leader Ayatollah Ali Khamenei warned the U.S. would receive a strong blow if it acted on Trump’s threat to bomb unless Tehran reaches a new nuclear deal with Washington.

After moving sharply higher over the past few sessions, the price of gold showed a modest move back to the downside during trading on Tuesday.

Gold for April delivery edged down $3.90 or 0.1 percent to $3,118.90, snapping a three-session winning streak and pulling back off the record closing high set in Monday’s session.

The modest pullback may have reflected profit taking following the recent surge, although selling pressure was relatively subdued amid lingering concerns about President Donald Trump’s trade policies ahead of the announcement of reciprocal tariffs on Wednesday.

“On Wednesday, it will be Liberation Day in America, as President Trump has so proudly dubbed it,” White House press secretary Karoline Leavitt said.

“The President will be announcing a tariff plan that will roll back the unfair trade practices that have been ripping off our country for decades,” she added. “He’s doing this in the best interest of the American worker.”

A report from the Washington Post this morning said White House aides have drafted a proposal to impose tariffs of around 20 percent on most imports to the U.S.

However, the Washington Post noted White House advisers cautioned that several options are on the table and no final decision has been made.

In U.S. economic news, a report from the Institute for Supply Management showed activity in the U.S. manufacturing sector contracted in March after two consecutive months of expansion.

The ISM said its manufacturing PMI dipped to 49.0 in March from 50.3 in February, with a reading below 50 indicating contraction. Economists had expected the index to edge down to 49.5.

Euro area inflation eased in March largely due to a slowdown in the services costs growth and strengthened the calls for further interest rate cuts from the European Central Bank.

The harmonized index of consumer prices rose 2.2 percent year-on-year in March, which was slightly slower than the 2.3 percent rise in February, flash data from Eurostat showed on Tuesday. The rate matched expectations.

Core inflation that excludes prices of food, alcohol and tobacco, slowed to 2.4 percent from 2.6 percent in the previous month. Inflation was expected to slow marginally to 2.5 percent.

Data showed that growth in food prices increased to 2.9 percent from 2.7 percent. Meanwhile, prices of energy fell 0.7 percent, reversing February’s 0.2 percent gain.

Services costs rose at a slower pace of 3.4 percent after a 3.7 percent increase. At the same time, growth in non-energy industrial goods prices held steady at 0.6 percent.

On a monthly basis, the HICP logged an increase of 0.6 percent in March. Final data is due on April 16.

The recent data support the view that the ECB will cut interest rates by 25 basis points again later this month, Capital Economics economist Jack Allen-Reynolds said.

In March, the ECB cut interest rates for a fifth policy session in a row and lowered the deposit rate by 25 basis points to 2.5 percent, which is its lowest level since February 2023. The bank had signaled a pause in the easing cycle as policy was deemed less restrictive.

Germany’s harmonized inflation eased to 2.3 percent in March from 2.6 percent in February and French inflation held steady at 0.9 percent. Spain’s inflation fell to a five-month low of 2.2 percent in March.

On the other hand, Italy’s inflation accelerated to 2.1 percent from 1.7 percent.

Separate official data showed that the euro area unemployment rate dropped to 6.1 percent from 6.2 percent in January. In the same period last year, the rate was 6.5 percent.

Unemployment decreased by 70,000 from the prior month. The number of people out of work totaled 10.580 million.

The youth unemployment rate climbed to 14.2 percent in February from 14.1 percent in the previous month.

Activity in the U.S. manufacturing sector contracted in March after two consecutive months of expansion, according to a report released by the Institute for Supply Management on Tuesday.

The ISM said its manufacturing PMI dipped to 49.0 in March from 50.3 in February, with a reading below 50 indicating contraction. Economists had expected the index to edge down to 49.5.

The modest decrease by the headline index partly reflected an accelerated contraction by new orders, as the new orders index slid to 45.2 in March from 48.6 in February.

“Orders continue to slow, as discussions about who will pay for potential tariff costs are the prime topic of negotiations between buyers and sellers,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

The report also showed a downturn by production, with the production index falling to 48.3 in March from 50.7 in February.

The employment index also declined to 44.7 in March from 47.6 in February, suggesting employment in the manufacturing sector decreased for the second consecutive month.

Meanwhile, the ISM said the prices index jumped to 69.4 in March from 62.4 in February, indicating a notable acceleration by the pace of price growth.

The Institute for Supply Management is scheduled to release a separate report on U.S. service sector activity in the month of March on Thursday.

The services PMI is currently expected to edge down to 53.0 in March after inching up to 53.5 in February, but a reading above 50 would still indicate growth.

Job opening in the U.S. fell by more than expected in the month of February, the Labor Department revealed in a report released on Tuesday.

The Labor Department said job openings dipped to 7.568 million in February from an upwardly revised 7.762 million in January.

Economists had expected job openings to slip to 7.630 million from the 7.740 million originally reported for the previous month.

The report said hires crept up to 5.396 million in February from 5.371 million in January, while total separations edged down to 5.261 million in February from 5.272 million in January.

Within separations, quits fell to 3.195 million in February from 3.256 million in January but layoffs rose to 1.790 million in February from 1.674 million in January.

OPEC+ ministers from eight nations that are gradually raising oil output will meet online on Thursday and are likely to approve a further hike in production from May, sources from the producer group told Reuters.

Eight members of OPEC+, a group that includes the Organization of the Petroleum Exporting Countries and allies led by Russia, are scheduled to raise oil output by 135,000 barrels per day in May.

That would be the second monthly increase under a plan to unwind some of the millions of barrels per day of cuts the group has had in place since 2022.

OPEC+ is simultaneously pressuring other producers that have exceeded their output targets to rein in output and pump below target for a time to compensate.

Two of the OPEC+ sources said the meeting was to review plans for some members to make additional output cuts to compensate for pumping above their quotas.

Two others said the group’s plan to continue to unwind their most recent layer of oil output cuts was expected to remain unchanged for May.

All sources declined to be identified by name due to the sensitivity of the matter. OPEC did not immediately reply to a Reuters request for comment.

OPEC+ has been cutting output by 5.85 million bpd, equal to about 5.7 per cent of global supply. The group has agreed on a series of steps since 2022 to support the market.

An OPEC+ ministerial committee, with the power to recommend to the larger group changes in production policy, was earlier scheduled to meet on April 5 although one source said this may also take place on Thursday.

Canadian manufacturing activity contracted at a steeper rate in March as a widening global trade war triggered the sharpest decline in new orders since shortly after the start of the COVID-19 crisis.

The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to 46.3 from 47.8 in February, touching its lowest level since December 2023. A reading below 50 indicates contraction in the sector.

“Canada’s manufacturing economy endured a challenging month in March as the specter of tariffs being applied on a wider range of goods and services continued to weigh heavily on the sector,” Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.

U.S. President Donald Trump unveiled last Wednesday a 25 per cent tariff on imported vehicles after previously raising tariffs on steel and aluminum. Additional tariffs are expected on April 2.

Canada sends about 75 per cent of its exports to the United States.

The output index fell to 45.7 from 47.5 in February and the new orders measure was at 42.3, its lowest level since May 2020.

“Unsurprisingly, export trade suffered especially, and firms are growing increasingly pessimistic about the outlook, typically now expecting to see output decline from present levels over the coming year,” Smith said. “Adding to the gloomy picture, and again a direct consequence of trade tariffs, inflationary pressures have picked up.”

The measure of future output fell to 45.1, its lowest level in data going back to July 2012, while the input price index was at 63.6, up from 58.9 in February and its highest level since August 2022.

The Bank of Canada has said it needs to ensure higher prices from tariffs do not spread. Investors expect the central bank to pause its interest rate cutting campaign at a policy decision on April 16.