US leading index falls but data relatively positive elsewhere

Yesterday provided further justification for the relaxation in the Fed's tightening bias. From Reuters:

... [T]he private Conference Board said its Composite Index of Leading Economic Indicators fell 0.5 percent in February following a 0.3 percent drop in January and 0.7 percent rise in December.

However, the labour market remains healthy.

Initial filings for state unemployment insurance aid fell for the third straight week and to the lowest in six weeks, dropping to 316,000 in the week ended March 17 from an upwardly revised 320,000 for the prior week, the Labor Department said.

In Europe, industrial new orders were down in January by 0.2 percent and 1.5 percent in the euro zone and the EU27 respectively, but year-on-year, they were up 12.0 percent and 10.1 percent respectively.

Yesterday's UK data were even better. Factory orders hit a 12-year high in March while retail sales volumes rose 1.4 percent in February, the biggest monthly increase since January 2005.

However, in Japan, sentiment among large manufacturers showed a deterioration in the first quarter. Reuters reports:

The business survey index on sentiment at large manufacturers in the January-March quarter fell to plus 0.1 from plus 7.1 in October-December, according to a joint survey by the Ministry of Finance and the Economic and Social Research Institute, an arm of the Cabinet Office.

Responses on the outlook for the coming months showed the BSI for big manufacturers at plus 4.1 for April-June and plus 11.8 for July-September...

The MOF survey also showed that firms see capital spending falling 5.3 percent in the next fiscal year starting on April 1, but recurring profit growing 6.2 percent.

But Japan's exports did not disappoint in February.

Separate data released by the MOF showed that Japan's trade surplus rose 7.7 percent in February from a year earlier to 979.6 billion yen ($8.34 billion)...

Exports rose 9.7 percent from a year earlier, against a market forecast of a 6.2 percent increase, while imports were up 10.1 percent.