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US PMI services jumps to 54.3, but manufacturing back in contraction

    By
    ActionForex
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    US economic activity accelerated at the end of Q1, led by strong rebound in the services sector. PMI Services surged from 51.0 to 54.3 in March, lifting Composite PMI from 51.6 to 53.5. However, the picture was not universally upbeat, with the Manufacturing PMI slipping back into contraction territory at 49.8, down from 52.7.

    Chief Business Economist Chris Williamson noted that the data suggest annualized growth of 1.9% in March, but only 1.5% for the quarter—marking a slowdown from Q4 2024.

    Williamson added that near-term risks also seem “tilted to the downside”. Much of the services rebound may prove short-lived. Manufacturing’s decline highlights the waning benefit from earlier “front-running of tariffs”. Business confidence fell to one of the lowest levels in the past three years, with anxious over the fallout from the Trump administration’s “Federal spending cuts and tariffs.”

    Tariff-related inflation pressures are beginning to show. Input costs are now rising at the fastest pace in nearly two years Manufacturers, in turn, are increasingly raising prices to protect margins. Though, services inflation remains relatively tame—thanks to soft demand and competitive pricing.

    Full US PMI flash release here.

    UK PMI manufacturing falls to 44.6, while services rises to 53.2

      By
      ActionForex
      -

      UK delivered a mixed set of PMI readings in March, with services providing a welcome surprise as the index rose from 51.0 to 53.2, a 7-month high. PMI Composite also improved from 50.5 to 52.0, suggesting modest expansion. However, the picture was clouded by a sharp deterioration in manufacturing, where the index slumped from 46.9 to 44.6 — its lowest level in 18 months.

      Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, cautioned against over-optimism, noting that “one good PMI doesn’t signal a recovery.”

      The data points to the economy barely expanding, with GDP growth tracking around 0.1% for the quarter. Employment continues to be trimmed as firms remain wary of rising costs and an uncertain economic outlook, with business confidence still hovering near January’s two-year low.

      Looking ahead, challenges appear to be mounting. Businesses are bracing for higher National Insurance contributions starting in Apri. Additionally, the anticipated unveiling of US tariff policy on April 2 adds another uncertainty.

      Full UK PMI flash release here.

      Eurozone PMI hints at green shoots, manufacturing leads the way

        By
        ActionForex
        -

        Eurozone PMI data for March offered fresh signs of economic stabilization, with Composite index rising to a 7-month high of 50.4, supported by a notable rebound in manufacturing. The PMI Manufacturing rose from 47.6 to 48.7, its highest level in 26 months. Manufacturing output crossed into expansion territory at 50.7, a 34-month high. Services PMI slipped slightly from 50.6 to 50.4, but remained in growth territory.

        Cyrus de la Rubia of Hamburg Commercial Bank noted the possibility that “temporary tariff-related import boom” could be inflating manufacturing figures. But he also expressed optimism that with, Europe’s investment drive in defense and infrastructure, “hope for a more sustained recovery seems well founded”.

        Encouragingly for ECB, pricing pressures in the services sector are easing, with both input costs and output prices decelerating. In manufacturing, price pressures remain moderate as well, helped by falling energy costs.

        However, risks remain. Potential retaliation tariffs from the US, trade tensions with China, and higher food prices caused by extreme weather events are all sources of uncertainty that could cloud the outlook and “make some ECB members hesitant to cut rates too aggressively.”

        Full Eurozone PMI flash release here.

        ECB’s Cipollone: Case for rate cuts strengthens amid falling energy, rising Euro and trade risks

          By
          ActionForex
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          ECB Executive Board member Piero Cipollone struck a dovish tone in an interview with Expansión, signaling that recent developments have reinforced the case for further interest rate cuts.

          Cipollone noted that at the time of the March meeting, ECB projections already showed inflation converging to the 2% target by early 2026—even under a rate path that included market expectations of cuts below 2%.

          Since then, “not only has this narrative been confirmed, but key issues have arisen that have strengthened the arguments in favour of continuing to lower rates”, he added.

          Cipollone noted that energy price pressures have already begun to reverse. Meanwhile, Euro appreciation and higher real interest rates are working in tandem to cool price growth.

          If US tariffs on European goods materialize, that would have a “negative impact on demand”, which would “further strengthen the downward trend in inflation”. Similarly, escalating U.S.-China trade conflict may push Chinese goods into Europe, adding to price suppression across the bloc.

          Notably, Cipollone suggested that inflation could reach target even sooner than the ECB’s latest projections anticipate.

          Full interview of ECB’s Cipollone here.

          BoJ’s Ueda reaffirms commitment to rate hikes despite market and financial pressures

            By
            ActionForex
            -

            BoJ Governor Kazuo Ueda told parliament today that the central bank remains committed to raise interest rate if underlying inflation is deemed to be approaching its 2% target.

            He emphasized that BoJ’s objectives remain squarely focused on price stability, and that its approach to policy “would not be disturbed by considerations for the BoJ’s finances.”

            Ueda’s remarks come as concerns mount over the BoJ’s balance sheet in light of interest rate hikes and volatility in equity markets.

            BoJ estimated in December that if short-term borrowing costs were to rise to 2%, it could incur losses of up to JPY 2 trillion.

            Additionally, Ueda noted that a 1000-point drop in the Nikkei 225 index would translate into a valuation loss of about JPY 1.8 trillion in its ETF holding.

            While these figures highlight the scale of financial risks, Ueda’s insistence on prioritizing price stability signals that BoJ is prepared to weather market volatility in pursuit of its monetary policy mandate.

            Japan PMI composite falls to 48.5, business confidence sinks to lowest since 2020

              By
              ActionForex
              -

              Japan’s private sector saw a sharp loss in momentum at the end of Q1, with PMI Composite falling from 52.0 to 48.5, marking the first contraction in five months. PMI Manufacturing dropped from 49.0 to 48.3, its lowest in a year and ninth consecutive month in contraction. More concerning was the steep decline in PMI services, which fell from 53.7 to 49.5 — the weakest reading since mid-2024.

              According to Annabel Fiddes of S&P Global, the downturn was driven by a “fresh fall in service sector activity” and an accelerated decline in manufacturing. Firms pointed to “strong inflationary pressure had dampened sales”, with clients showing increasing hesitation to place orders.

              The broader picture is one of growing pessimism. Japanese firms cited a host of structural and cyclical challenges — from persistent inflation and labor shortages to an aging population and deepening global trade uncertainty. As a result, business confidence for future activity fell to its lowest level since August 2020.

              Full Japan PMI flash release here.

              Australia’s PMI manufacturing jumps to 52.6, services rises to 51.2

                By
                ActionForex
                -

                Australia’s PMI Manufacturing surged to 52.6 from 50.4—marking a 29-month high—while PMI Services ticked up to 51.2 from 50.8. PMI Composite , which combines both sectors, rose to a 7-month high at 51.3.

                Jingyi Pan of S&P Global Market Intelligence highlighted that the output growth was not only the strongest in seven months but also “broad-based” across both manufacturing and services. Despite a decline in export orders due to weather disruptions and weak global conditions, domestic demand rebounded impressively, pushing new orders to their highest growth rate in nearly three years.

                However, the report also highlighted a notable dip in business confidence. Suppressed price increases may have helped support near-term demand. But “tariff uncertainty may continue to cast a shadow on output growth in the year ahead”.

                Full Australia PMI flash release here.

                NY Fed’s Williams: Policy rate ‘appropriate’ amid high uncertainty and mixed signals

                  By
                  ActionForex
                  -

                  New York Fed President John Williams highlighted the elevated level of uncertainty facing the US economy. Speaking at a public event, Williams acknowledged that “it’s hard to know with any precision how the economy will evolve,” pointing to a wide range of potential scenarios shaped by fiscal and trade policy shifts, geopolitical risks, and other external developments.

                  Williams noted that both hard economic data and forward-looking indicators have been giving mixed signals. He added that the recent surge in policy uncertainty measures.

                  Despite the murky backdrop, he defended Fed’s current stance, describing the 4.25% to 4.5% policy rate range as “modestly restrictive” and “entirely appropriate.” With inflation still running slightly above target and labor markets remaining solid, there appears to be little urgency to shift course in the near term.

                  Fed’s Goolsbee: Uncertainty warrants patience, but rates likely be lower in 12-18 months

                    By
                    ActionForex
                    -

                    Chicago Fed President Austan Goolsbee struck a cautious but balanced tone in his latest remarks, saying Fed should “wait to see some of these things get cleared up” given the high degree of policy uncertainty.

                    Speaking to CNBC, he noted a shift in tone among business and civic leaders in recent weeks, highlighting growing “anxiety” and delayed capital spending decisions as companies weigh the impact of tariffs and other fiscal policy developments.

                    Despite the cautious near-term stance, Goolsbee reaffirmed his longer-term view that interest rates are likely to be lower 12 to 18 months from now.

                    While the Fed may not be in a rush to act immediately, he emphasized the importance of continued progress on inflation as a key condition for future easing.

                    Canadian retail sales down -0.6% mom in Jan, more contraction in Feb

                      By
                      ActionForex
                      -

                      Canada’s retail sales dropped -0.6% mom to CAD 69.4B in January, marking a steeper-than-expected decline and signaling subdued consumer spending.

                      The largest drag came from motor vehicle and parts dealers, while overall sales fell in three of nine subsectors.

                      Core retail sales, which strip out gasoline and auto-related purchases, also slipped -0.2%.

                      Adding to the concern, Statistics Canada’s advance estimate suggests retail sales fell another -0.4% in February.

                      Full Canada retail sales release here

                      Japan’s CPI core slows less than expected to 3% in Feb

                        By
                        ActionForex
                        -

                        Japan’s core consumer inflation eased for the first time in four months in February, but less than market expectations. While the data strengthens the case for another BoJ rate hike at the April 30–May 1 meeting, policymakers may still choose to wait until July to better assess the impact of US tariff escalation and broader global financial market risks.

                        CPI core (excluding fresh food) slowed from 3.2% yoy to 3.0% yoy, slightly above expectations of 2.9%. The moderation was partly due to the resumption of government subsidies on utility bills. Despite this, core inflation has stayed above BoJ’s 2% target since April 2022.

                        More significantly, core-core CPI (excluding food and energy) rose from 2.5% yoy to 2.6% yoy, marking the fastest pace since March 2024. This continued strength in underlying inflation, even as services inflation softened slightly from 1.4% yoy to 1.3% yoy, reflects steady pass-through of higher labor costs.

                        Meanwhile, headline CPI slowed from 4.0% yoy to 3.7% yoy.

                        New Zealand posts NZD 510m trade surplus as exports surge across key markets

                          By
                          ActionForex
                          -

                          New Zealand posted a surprise trade surplus of NZD 510m in February, defying expectations of a NZD -235m deficit.

                          Goods exports jumped 16% yoy to NZD 6.7B, led by strong demand from key trading partners including China, Australia, and the EU. Notably, exports to China surged by 16% yoy, while shipments to Australia and the EU rose by 17% yoy and 37% yoy, respectively. The only major decline was seen in exports to the US, which slipped by -5.5% yoy.

                          Goods imports edged up a modest 2.1% yoy to NZD 6.2B, with notable volatility in country-level data. Imports from the US spiked 41% yoy, while those from South Korea plunged -57% yoy. Imports from Australia (-9.3% yoy) and the EU (-3.3% yoy)also declined. Despite the pickup from the US and China (3.8% yoy), subdued import figures from other regions helped tilt the trade balance into surplus.

                          Full NZ trade balance release here.

                          BoC Governor: Crucial to Stop Initial Tariff Price Shocks from Becoming Generalized Inflation

                            By
                            ActionForex
                            -

                            Bank of Canada Governor Tiff Macklem issued a stark warning on the economic consequences of prolonged US tariffs, emphasizing that broad-based and long-lasting trade barriers will depress Canadian exports, reduce overall output, and push consumer prices higher.

                            In a speech overnight, Macklem noted that the unpredictability of US tariffs, marked by “constant policy reversals”, has injected significant uncertainty into the outlook for Canadian businesses and households.

                            Macklem highlighted two major areas of concern: uncertainty about which tariffs will be imposed and for how long, and uncertainty about their economic impact.

                            Already, the BoC has observed that businesses are cutting back investment and hiring, and many households are growing more cautious with spending. He warned that if broad-based tariffs remain in place, the result will be “less demand, less economic growth and higher inflation”.

                            While monetary policy cannot prevent the initial rise in prices caused by tariffs, Macklem stressed that it must act to “prevent those initial, direct price increases from spreading”.

                            “We must ensure that higher prices from tariffs do not become ongoing generalized inflation,” he emphasized.

                            Full speech of BoC’s Macklem here.

                            US initial jobless claims rise to 223k vs exp 222k

                              By
                              ActionForex
                              -

                              US initial jobless claims rose 2k to 223k in the week ending March 15, slightly above expectation of 222k. Four-week moving average of initial claims rose 750 to 227k.

                              Continuing claims rose 33k to 1892k in the week ending March 18. Four-week moving average of continuing claims rose 6k to 1876k.

                              Full US jobless claims release here.

                              BoE holds rates at 4.50%, Dhingra lone dissenter for a cut

                                By
                                ActionForex
                                -

                                BoE left the benchmark Bank Rate unchanged at 4.50%, in line with market expectations. Known dove Swati Dhingra once again dissenting, and voted in favor of a 25bps rate cut. However, Catherine Mann, who had previously voted for a 50bps cut, switched her stance and supported keeping rates on hold.

                                The accompanying statement emphasized a “gradual and careful approach” to rate cuts, reinforcing that BoE is not in a rush to ease policy despite some signs of economic softness.

                                BoE also highlighted growing global uncertainties, particularly surrounding intensified trade policy risks and geopolitical tensions. The committee acknowledged the impact of new US tariffs and retaliatory measures from some governments. Additionally, recent German fiscal reforms were noted.

                                While UK GDP growth has been “slightly stronger than expected”, business surveys continue to point to underlying weakness in employment intentions and broader economic activity. BoE expects CPI to rise to around 3.75% in Q3 2025, and to “fall back thereafter”. But policymakers remain cautious about potential persistent inflationary pressures.

                                Full BoE statement here.

                                ECB’s Lagarde warns US-EU tariff war could slash eurozone growth by 0.5%

                                  By
                                  ActionForex
                                  -

                                  Speaking to a European Parliament committe, ECB President Christine Lagarde warned that US tariffs of 25% on European imports could have a significant negative impact on the Eurozone economy, cutting growth by around 0.3% in the first year.

                                  If the EU responds with retaliatory tariffs, the impact could deepen, reducing Eurozone GDP growth by as much as 0.5%.

                                  While the sharpest impact would be felt in the first year, Lagarde emphasized that the effects would be long-lasting, leaving a “persistent negative effect on the level of output”.

                                  Beyond growth concerns, inflation outlook would also become highly uncertain in such a scenario.

                                  In the short term, EU retaliatory measures and a weaker Euro—stemming from lower US demand for European products—could push inflation higher by around 0.5%.

                                  In the medium term, weaker economic activity would dampen price pressures, ultimately counteracting the initial inflationary impact.

                                  Full opening remarks of ECB’s Lagarde here.

                                  SNB cuts 25bps, flags downside inflation risks and uncertain growth outlook

                                    By
                                    ActionForex
                                    -

                                    SNB delivered a widely expected 25bps rate cut, bringing the policy rate down to 0.25%. In its statement, SNB justified the decision by pointing to low inflationary pressures and “heightened downside risks to inflation”.

                                    The central bank acknowledged that Switzerland’s economic outlook has become “considerably more uncertain”, particularly due to rising global trade tensions and geopolitical risks. The external environment remains a key threat to growth.

                                    The new conditional inflation forecast suggests that inflation will remain well within its price stability range, averaging 0.4% in 2025, and 0.8% in both 2026 and 2027. These projections assume that the policy rate stays at 0.25% throughout the forecast horizon.

                                    On the growth front, SNB expects GDP to expand between 1% and 1.5% in 2025, with domestic demand benefiting from rising real wages and easier monetary conditions. However, weak external demand is expected to act as a drag on growth. For 2026, SNB anticipates GDP growth of around 1.5%.

                                    UK payrolled employment rises 21k in Feb, unemployment rate unchanged at 4.4% in Jan

                                      By
                                      ActionForex
                                      -

                                      In February, UK payrolled employment rose by 21k (0.1% mom). However, median monthly pay growth slowed to 5.0% yoy from 6.0%, reinforcing signs that wage pressures are gradually easing. However claimant count, surged 44.2k, far exceeding expectations of 7.9k.

                                      In the three months to January, unemployment rate remained unchanged at 4.4%, slightly better than the expected 4.5%. Average earnings including bonuses rose by 5.8% yoy, just below expectations of 5.9%. Excluding bonuses, wages rose 5.9% yoy, in line with forecasts.

                                      Full UK labor market overview release here

                                      SNB to cut, BoE to hold, a look at GBP/CHF

                                        By
                                        ActionForex
                                        -

                                        Two major central banks will announce their monetary policy decisions today, with SNB leading, followed by BoE.

                                        SNB is widely expected to lower its policy rate by 25bps to 0.25%. With inflation at just 0.3% in February, well below the mid-point of target range, there is both room and necessity for further easing to keep medium-term inflation expectations anchored closer to 1%.

                                        However, the urgency for additional policy support appears to be diminishing, especially with growing optimism around Eurozone economy. Stronger Eurozone growth, driven by major fiscal expansion plans, is expected to lift Euro and boost demand for Swiss exports, which could help mitigate recession and deflation risks in Switzerland.

                                        A Reuters poll of economists showed that most expect rates to remain at 0.25% by year-end, while 10 foresee a move to 0%, and only three expect SNB to maintain the current 0.50% level.

                                        Meanwhile, BoE is widely expected to hold its Bank Rate steady at 4.5%, with little change to its cautious forward guidance. A Reuters poll of 61 economists showed unanimous expectations for a rate hold today, with the next cuts projected for May, August, and November.

                                        The key focus for markets will be whether any additional Monetary Policy Committee members join Catherine Mann and Swati Dhingra in voting for an immediate rate cut, which could signal a shift toward a more dovish stance in the coming months.

                                        Technically, while GBP/CHF extended the rally from 1.1086, it has clearly struggled to find convincing momentum. It’s plausible that this rise is the third leg of the corrective rebound from 1.0741, which has already completed after meeting 61.8% projection of 1.0741 to 1.1368 from 1.1086 at 11437. Break of 1.1299 support will solidify this bearish case and bring deeper fall back to 1.1086 support. Nevertheless firm break of 1.1501 will pave the way to 1.1675 resistance next.

                                        Australian employment plunges -52.8k in Feb, unemployment rate unchanged at 4.1%

                                          By
                                          ActionForex
                                          -

                                          Australia’s employment dropped sharply by -52.8k in February, significantly missing market expectations of 30k gain. The decline was broad-based, with full-time jobs falling by -35.7k and part-time employment down by -17k.

                                          Unemployment rate remained steady at 4.1%, in line with forecasts. The participation rate declined by -0.4% to 66.8%, suggesting that fewer people were actively seeking work, which helped keep the jobless rate from rising. Additionally, monthly hours worked fell by -0.4% mom, reflecting softer labor market conditions.

                                          The Australian Bureau of Statistics attributed part of the decline in employment to fewer older workers re-entering the labor force. However, the broader trend still points to resilience in the job market, with employment up by 266k people, or 1.9%, compared to last year. The annual employment growth rate remains close to the 20-year pre-pandemic average of 2.0%.

                                          Full Australia employment release here.

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