LIVE MARKETS-Liberation data: ADP, factory orders, mortgages

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LIBERATION DATA: ADP, FACTORY ORDERS, MORTGAGES

Three partly cloudy but generally upbeat economic reports went virtually unnoticed on Wednesday, with market participants on tenterhooks at the start of President Donald Trump's "liberation day" tariff announcements.

Private employers increased their payrolls by 155,000 in March, according to payrolls processor ADP, marking a 84.5% jump from February.

While ADP's National Employment index USADP=ECI is not a reliable predictor of official Labor Department data, the number printed 28,000 higher than 127,000 private payrolls gains analysts expect Friday's employment report to show.

Noting the NEI's poor track record as an advance preview to payrolls, Carl Weinberg, chief economist at High Frequency Economics advises market observers to "use ADP only to gauge the big picture."

"If you are looking for payrolls declines to support a theory of economic contraction, you will not find it in this report," Weinberg adds. "That does not mean the economy is not contracting."

Speaking of Friday's jobs data, the non-private (or, government) side will be subject to higher-than-usual scrutiny amid billionaire Elon Musk's ongoing mass DOGE firings.

The graphic below tracks ADP's NEI and measures its accuracy (or lack thereof) relative to Labor Department data.

Pivoting to the manufacturing sector, new orders for U.S. factory-made merchandise USFORD=ECI increased by 0.6% in February, barely edging out the 0.5% consensus, but marking a sharp deceleration from January's 1.8% gain.

That deceleration agrees with ISM data released on Tuesday, which showed the manufacturing sector dipping ever so slightly into contraction (or, below 50) after enjoying two straight months in expansion territory (albeit barely).

The Commerce Department's report also revised new orders for core capital goods, easing February's decline to 0.2% from its originally-stated 0.3% drop.

Any decline in that metric is bad news, as it's widely associated with U.S. corporate capex plans.

Swiveling over to the housing market, the cost of financing home loans inched a tiny bit lower last week, but don't get excited because so did mortgage demand.

Again, average 30-year fixed contract rate USMG=ECI shaved off exactly one basis point to 6.70%, according to the Mortgage Bankers Association (MBA).

While that was enough to provoke a 1.5% increase in applications for loans to buy homes USMGPI=ECI, a 5.6% drop in refi demand USMGR=ECI, which last week accounted for 38.6% of the pie, resulted in a composite decrease of 1.6%.

"Overall purchase activity has shown year-over-year growth for more than two months as the inventory of existing homes for sale continues to increase, a positive development for the housing market despite the uncertain near-term outlook," says Joel Kan, MBA's deputy chief economist. "Refinance applications were down almost 6 percent last week and remain very sensitive to rate movements, as most borrowers have mortgages with lower rates."

The average 30-year fixed rate is 21 basis points cooler than the same week a year ago. Over the same time period purchase and refi demand have increased 8.7% and 56.6%, respectively.

(Stephen Culp)

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