Last week was probably the best there has been since the slump started back in late 2007.
Global data releases over the past week were generally positive, particularly for jobs and manufacturing, with business conditions surveys improving in most regions including in the US and China.
And there was more overnight with good figures from the US service sector and a sharp rise in pending home sales as the end of a tax credit approaches this month.
US 10 year bond yields hit 4% for the first time since last June.
But housing and construction remains weak in the UK, Europe and the US.
In parts of Asia (outside Japan) such as India, China and Australia, construction and business investment remains solid.
Japanese business sentiment is improving as exports recover.
The US jobs market is now unequivocally positive, there are signs in some parts of Europe, especially Germany, that the jobs slump is coming to an end, and manufacturing picked up sharply last month in China, Europe and the US.
An encouraging figure came from the country’s largest supply management association – the Institute for Supply Management – to show the manufacturing index rising to 59.6% in March, up from 56.5% in the previous month, to mark the eighth consecutive monthly growth.
New orders for manufactured goods to US factories also rose by 0.6% in February, the 10th increase in 11 months.
Chinese manufacturing was also strong, hinting at a strong set of March and March quarter stats later this month.
This augurs well for commodity prices, with oil topping $US86 a barrel overnight and copper joining it in another 20 month high.
Coming on top of the record settlements for iron ore and a surge in coal price, the commodity market is now approaching a boom, thanks mostly to the rebound in China.
In Australia though have to keep in mind that we, China and India are all starting, or are well into, significant monetary policy tightenings.
Brazil, Malaysia and Korea won’t be far behind as well.
Similar moves in the still battered economies of Japan, Europe and the US are still a long way off.
Some of the optimism in Germany vanished by the news that retail sales fell by more than expected in February, but the surprise improvement in unemployment was the bigger news.
But that is going to be a feature of this recovery in most of the battered economies: sometimes it will seem like one step forward, two steps back as different sectors recover, then slow.
March employment data in the US signals that the US economic recovery is becoming self-sustaining.
Payrolls were up by 162,000 in March and employment in the previous two months was revised up by 62,000 jobs.
In fact jobs growth has been positive in four out of the past five months in the US.
While the hiring of census workers added 48,000 jobs, this still left private sector employment growth of 123,000.
And netting out any weather related effects, private sector employment growth averaged 66,000 over February and March.
The US needs 125,000 new jobs a month to be created to just soak up natural growth in the labour market.
US unemployment remained at 9.7%, but now looks like it has peaked.
The bottom line is that US private sector economic activity is turning again with higher profits leading to increased employment and investment which in turn will support growth in consumer spending and housing activity, and further gains in profits, etc.
It’s also worth noting that jobs growth so far is not so strong that it will bring forward the timing of Fed rate hikes – unemployment is still very high and don’t expect any move in the Federal Funds Rate until late this year.
A senior Fed member last week forecast that unemployment would still be above 9% at the end of 2010.
