More of the same

There was more evidence of a slowing US economy yesterday. Reuters reports:

The Institute for Supply Management said its non-manufacturing index slid to 52.4 in March, down from February's 54.3 and confounding expectations for a rise.

Despite the weak result, which came in below even the lowest of 85 estimates in a Reuters survey, the ISM's inflation gauged jumped.

Meanwhile, U.S. private employers likely added 106,000 jobs in March, according to a report by ADP Employer Services. The March figure was higher than February's 57,000 gain but below markets' expectations...

The Commerce Department reported that new orders at U.S. factories rose just 1 percent in February, below expectations for a 1.8 percent rise.

A January drop in factory orders was revised downward to the biggest decline in more than six years. Orders for durable goods, items meant to last three years or more, rose 1.7 percent in February, also revised down from last week.

However, there was some positive economic news. Planned U.S. job layoffs fell 42 percent to an eight-month low in March from February, Challenger, Gray & Christmas, Inc., the global outplacement consultants, said. But the outlook remained bleak in the troubled housing market, the company said.

Europe's economy looks better. From Bloomberg:

European service industries from banking to airlines expanded in March at close to the fastest pace in six months after unemployment declined and economists raised forecasts for growth.

Royal Bank of Scotland Group Plc's services index slipped to 57.4 from 57.5 in February. That compares with 57.9 in January, the highest since July. The index is based on a survey of purchasing managers by NTC Economics Ltd. and a reading above 50 indicates expansion. Economists expected the gauge to stay unchanged at 57.5, according to the median estimate of 32 analysts surveyed by Bloomberg News...

An increase in value-added tax in Germany and higher income tax in Italy have also curbed household spending in Europe. Euro region retail sales fell 0.8 percent in January and rebounded just 0.3 percent in February, the European Union's statistics agency Eurostat said today. The Italian services index fell to 54.1 last month, its lowest level since November.

And German factory orders jumped in February.

Orders, adjusted for seasonal swings and inflation, increased 3.9 percent from January, when they declined 0.3 percent, the Economy and Technology Ministry said today. Economists expected a gain of 0.5 percent, the median of 38 estimates in a Bloomberg News survey showed.

Meanwhile, the UK services accelerated last month. From Bloomberg:

An index based on replies from about 700 service companies, excluding retailers, showed a reading of 57.6, up from 57.4 in January, the Chartered Institute of Purchasing and Supply and Royal Bank of Scotland Group Plc said today. Economists expected 57.5, the median of 34 estimates in a Bloomberg survey showed.

As did shop prices, the British Retail Consortium's shop price index increasing 0.49 percent in March, up from 0.29 percent in February, mainly on higher food prices.

Despite the relatively weak US data, US stock prices were up yesterday. Bloomberg reports:

U.S. technology shares sent the Dow Jones Industrial Average and Nasdaq Composite Index to their fifth consecutive gain on an improved profit forecast for Microsoft Corp...

The Dow industrials added 19.75, or 0.2 percent, to 12,530.05. The Nasdaq rose 8.36, or 0.3 percent, to 2458.69. The S&P 500 increased 1.60, or 0.1 percent, to 1439.37.

Emerging markets did even better.

... The Morgan Stanley Capital International Emerging Markets Index climbed 1.2 percent to 948.03, eclipsing a record of 943.88 set three days before a sell-off in China sparked $3.3 trillion in equity losses worldwide. Indexes in South Korea, China, Indonesia, Peru, Mexico, the Czech Republic and Poland climbed to all-time highs.

Lower oil prices helped.

Crude fell in New York after Iran's President Mahmoud Ahmadinejad said that he will release 15 seized Britons, easing concern of a conflict in the Persian Gulf. Prices pared losses after an Energy Department report showed that U.S. gasoline supplies plunged for an eighth week.

Oil for May delivery fell 26 cents, or 0.4 percent, to settle at $64.38 a barrel on the New York Mercantile Exchange...

In other markets, U.S. Treasuries rose after the weaker- than-forecast economic reports, pushing benchmark 10-year note yields down from a one-month high...

Copper prices in New York gained for the sixth session in a row, the longest rally since September, on signals that mine development will lag behind demand from China and other countries with surging economies.

So we have a slowing US economy but a resilient European economy, prices/markets rising (even oil kept much of its recent gains) and interest rates low. In other words, more of the same.