1. The Fed’s Beige Book reported that overall economic activity increased at a “slight to moderate pace” in 10 out of 12 distrcits and employment remaining in a “low-hire, low-fire” environment, while inflation pressures intensified. Our Beige Book diffusion indicator rose to the highest level since early 2025.

2. Growth in the services sector accelerated.

• This chart shows the contribution of each component to the headline figure.

• The business activity index strengthened.

• The new orders component also jumped, signaling a robust demand pipeline.

• The Backlog of Orders Index eased.

• However, the employment index edged down.

• Price pressures climbed to the highest level since August 2022.

3. ADP private payrolls rose by the most since early 2025, with businesses of all sizes adding to their payrolls.

• Here is a breakdown by industry.

• Smoothed on a rolling three-month basis, the ADP reports show some upward momentum in the labor market.

• Wage growth held steady for job stayers but cooled for job changers.

4. Factory orders surged more than expected.

• The headline strength was driven by the volatile transportation sector. Excluding transportation, orders still posted a solid gain.

– In level terms, factory orders excluding transportation jumped to a fresh record high.

• Growth in core capital goods orders was revised upward by 10 bps to −1%.

5. Mortgage applications fell further even as the 30-year fixed mortgage rate eased.

• Refinancing activity continued to edge down.

6. Trailing 10-year inflation is the highest since 1998.

h/t @OddStats
• Goldman estimates that the boost from commodity price increases to year-over-year core PCE inflation will peak around 0.35 percentage points in Q4 2026 in the baseline scenario for oil prices.

– Here’s a look at Goldman’s core PCE forecasts for the rest of the year.

7. When VIX spikes higher, the number of words in the FOMC statement goes up. With geopolitical risks easing and new Fed Chair Kevin Warsh focused on simplifying Fed communication, the number of words in the FOMC statement could move down, according to Apollo.

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1. Labor productivity unexpectedly contracted in Q1, as output contracted despite higher hours worked, with weakness concentrated in construction, agriculture, and forestry.

2. The services sector returned to marginal growth, but weakening demand, softer business confidence, and declining employment highlighted a fragile backdrop.

• Input cost inflation accelerated to a four-year high amid rising fuel and wage expenses.

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1. The UK’s tax burden is on track to reach a postwar high, …

… as the number of taxes has doubled over the past three decades to nearly 90.

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1. The Services PMI reports showed continued weakness in the sector.
• Eurozone (revised up but remained in a contraction):