Job and manufacturing slumps point to a slowdown in the economy

diving letter:

• manufacturing last month and job vacancies fell in February, suggesting a weakening of two key economic indicators amid ongoing recession forecasts.
• Job vacancies at US employers fell to 9.9 million in February from 10.6 million in the previous month. This was announced by the Ministry of Labor Tuesday. The Institute for Supply Management said its manufacturing index fell to 46.3 in March from 47.7 in February, the lowest level since May 2020, and for the fifth straight month the index has fallen below 50 – the threshold between contractions and expansion.
• “Hard times are ahead” Pantheon Macroeconomics Senior US Economist Kieran Clancy said: citing partial fallout from the failure of Silicon Valley Bank and two other banks last month. “The rise in interest rates over the past year and the tightening of credit conditions caused by bank failures are dealing a severe blow to capital spending, the lifeblood of domestic manufacturing activity.”

Dive insight:

A credit pullback triggered by turmoil in the banking system could slow the economy in a similar way to additional monetary tightening, Federal Reserve Chair Jerome Powell said March 22 after policymakers cut interest rates to a range between 4.75% and had raised 5%.

“Many forecasters are concerned about how it could pull into a credit crunch and stall economic activity,” Fed Governor Lisa Cook said Monday in response to questions at a University of Michigan forum.

“We’re seeing the credit crunch happening,” she said, noting that the trend preceded the March 10 SVB collapse by several weeks.

JPMorgan Chase CEO Jamie Dimon also expressed concern that the banking turmoil has darkened in an annual letter to shareholders on Tuesday the credit prospects.

“While this isn’t like 2008, it’s not clear when this current crisis will end,” Dimon said. “It has created a lot of jitters in the market and will clearly lead to some tightening of financial conditions as banks and other lenders become more conservative.”

Almost two out of five banks (37.5%) reported tighten credit standards in a survey conducted March 21-March 29 by the Dallas Fed. The district bank region includes Texas and parts of New Mexico and Louisiana.

“Credit standards and conditions continued to tighten significantly, and the period also saw significant increases in credit prices,” the Dallas Fed said. “The outlook for banks continued to deteriorate, with contacts expecting a decline in loan demand and activity and an increase in non-performing loans over the next six months.

In one possible sign, the economy is slowing, new orders and inventories at manufacturers The past month has fallen the most among the components underlying the ISM manufacturing index. Orders fell 0.7% in February, the third drop in the past four months, the Commerce Department reported on Tuesday.

February job openings, as measured by the Department of Labor’s Job Openings and Labor Turnover Survey, fell below estimates, reflecting this demand for labour may fall more in line with the offer.

The job vacancy-to-unemployment ratio fell to 1.67 in February from 1.9 in January.