Haver’s data services are provided through the DLX platform; delivering tools for data management, visualization, modeling and publishing. DLX is designed to increase productivity and integrates with Excel, PowerPoint, and major statistical software packages; MatLab, R, Python, SAS, E-views and Stata. DLX component application DLXVG3 offers precision graphics, publishing, analytic tools, and easy navigation for all Haver databases.

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Chart and compare multiple data series with accompanying data table of values

Advanced functions (growth rates, moving averages, aggregation, seasonal adjustment)

Analytical tools (cycle charts, scatterplots, trend lines, and recession shading)

Complete graph customization (axis scaling, sizing, formatting, styles)

Excel and PowerPoint direct export and complete integration (dynamic spreadsheets and presentations update on a click)

DLXVG3

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DLX Add-ins for all versions of Excel provide instant data updates of entire workbooks

Use DLXVG3 to locate data series codes from within any file, easily creating new spreadsheets for analysis

Edit date ranges, archive data, apply functions

Excel Spreadsheet Add-ins

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Haver offers timely, accurate, and professionally supported data via an update service, meeting the strictest demands of the institutional research community

AutoUpdate provides fast and reliable data updates within seconds of source releases

Timer service runs continuously on an hourly basis when DLX is running

Manual updates offer clients the independence to update data retrievals on any desired schedule

All database updates retrieve only the data series that have changed and send only the data points that have been updated; including revisions

Timely Updates

DLX software tools to convert data into many different formats needed for diverse analytical frameworks

Haver supports a DLX API permitting clients to leverage and build processes with DLX data

Database Compatibility

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Data Link Express

Platform Independent site delivering DLX Databases across any workstation or device.

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HaverView

[Matlab](http://matlab.com) by The MathWorks lets you access, visualize, and analyze historic time-series data to identify patterns or uncover complex relationships. From within a single environment you can:

- Access data from multiple sources including files, spreadsheets, databases, data providers, and the Web
- Store data in financial time-series objects to simplify data management, data transformation, missing-data handling, and date-math calculations
- Perform technical analysis with moving averages, oscillators, stochastics, and indices
- Create custom analysis routines and visualizations or animations to capture, present, and share your analysis processes and discoveries
- Customize your analysis environment with advanced functionality from signal processing, statistics, or econometrics

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MATLAB

[Stata Data Analysis and Statistical Software](https://www.stata.com) by StataCorp LP is an integrated statistical package designed for researchers of all disciplines. It provides the ability to do data analysis, data management and graphics and has features such as multiple imputation, factor variables, GMM, competing-risks regression, state-space modeling, predictive margins, and more.

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Stata

[SAS](https://www.sas.com) provides an integrated environment for predictive and descriptive modeling, data mining, text analytics, forecasting, optimization, simulation, experimental design and more. From predictive analytics to model deployment and process optimization, SAS provides a range of techniques and processes for the collection, classification, analysis and interpretation of data to reveal patterns, anomalies, key variables and relationships, leading ultimately to new insights and better answers faster.

[SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) is a seamless interface between Haver and SAS data processing that enables SAS users to read economic and financial time series data that reside in a Haver Analytics DLX (Data Link Express) database. [SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) requires both SAS/ETS and Base SAS Software.

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[RATS (Regression Analysis of Time Series) Econometric Software](https://estima.com) by Estima is a leading econometrics and time-series analysis software package. It provides ability to do linear and non-linear least squares, forecasting, SUR and ARIMA models and in addition, supports advanced techniques such as GMM, ARCH and GARCH models, state space models, and more.

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RATS

Session 1: Bootcamp Part 1

Visualization with GGPlot2 and data analysis

Session 2: Bootcamp Part 2

Session 3: Univariate Models Part 1

Session 4: Univariate Models Part 2

Session 5: Vector Autoregressions

Session 6: Cointegration and error-correction models

A popular open source option for statistical computing and graphics that is available on many UNIX platforms, Windows and MacOS

Estimating, evaluating, and forecasting ARIMA models

Understanding the concept of non-stationarity and testing for unit roots

Estimating autoregressions, granger causality tests, and impulse response functions

Understanding the concept of cointegration and testing using the Enger-Granger test

Estimating and forecasting with vector error correction models

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Teaches econometrics and forecasting at the University of Colorado Denver. He has over 15 years of econometric experience in both the private and public sector.

Daniel L. Jerrett, Ph.D.

Abdel M. Zellou, Ph.D.

Bootcamp and Econometric Tools 1 & 2

Econometrics Training: Applied Time Series in R

Session 5: Multivariate Models Part 1

Session 6: Multivariate Models Part 2

Haver partners with SmartMacro Labs to offer a two week immersive online course introducing participants to the power of the Python programming language. This applied hands-on training develops statistical economics skills with a concentration on economics and finance.

Gain proficiency in building modern time-series models in Python through real-world applications. Designed for professionals in both the public and private sector, the course does not require prior experience, assuming only that participants have a basic understanding of regression and statistical concepts.

Proficiency working in Jupyter notebooks and the Python environment

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Remote Training: Applied Time Series in Python

USD/EUR exchange rate uncoupling from interest rate differential

Tom Moeller

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The advance estimate of the U.S. international trade deficit in goods deepened to $162.0 billion in March after narrowing to $147.8 billion in February, as reported by the U.S. Census Bureau showed. A deficit of $143.0 billion for March had been expected by the Action Economics Forecast Survey. In Q1'25, the goods trade deficit widened to $463.2 billion after rising to $324.0 billion in Q4'24 from $305.1 billion in Q3'24. In real terms, the Q1’25 trade deficit is likely to have subtracted from real GDP growth, after having added 0.26 percentage point to growth in Q4'24.

Total goods imports jumped 5.0% (31.3% y/y) to $342.7 billion in March after a 0.3% February gain. Consumer goods imports surged 27.7% (54.1% y/y) following a 2.9% increase. Auto imports strengthened 6.6% (9.5% y/y) after a 1.2% rise while capital goods imports increased 4.0% in March (23.2% y/y) following a 1.7% February gain. Offsetting these increases, imports of industrial supplies & materials declined 13.3% (+39.9% y/y) after falling 3.7% in February. Foods, feeds & beverage imports eased 0.4% (+10.9% y/y) following a 2.1% decline and imports of “other” goods were off 5.6% (+13.7% y/y) after a 4.7% February increase.

Total goods exports rose 1.2% (6.9% y/y) to $180.8 billion in March, the fourth rise in five months, after increasing 3.7% in February. The rise reflected a 6.9% surge (-0.5% y/y) in foods, feeds & beverages after a decline of 2.5% In February. Industrial supplies & materials exports gained 3.2% (4.5% y/y) after increasing 4.6% in February. Exports of autos surged 7.9% (10.8% y/y) following a 2.7% increase. Exports of other goods edged 0.3% higher (2.4% y/y) after four straight months of decline. Offsetting these gains, consumer goods exports declined 1.6% (+1.9% y/y) following a 0.6% rise. Capital goods exports were off 2.6% (+13.3% y/y) after rising 4.8% in February.  

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Advance reading reflects higher consumer goods & auto imports.
- Other imports also are strong, while exports rise modestly.
- Exports growth held back by fall in nonauto consumer & capital goods.

U.S. Goods Trade Deficit Deepens to Another Record in March as Imports Surge

Winnie Tapasanun

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U.S. house prices edged up 0.1% m/m in February after rises of 0.3% in January (+0.2% initially) and 0.4% in December (+0.5% previously), according to the Federal Housing Finance Agency (FHFA) House Price Index. The February HPI at 437.32 was 13.3% above a low of 386.15 in August 2022. The February m/m reading was the 11th straight monthly gain but the smallest since May 2024. The year-on-year rate of increase decelerated to 3.9% in February, the lowest since June 2023, from 5.0% in January; thus, having remained lower than 7.3% in February 2024 and well below a high of 18.7% in February 2022.

House prices rose m/m in February (vs. January) in six of the nine census divisions. These included New England (1.3% vs. 0.1%), East North Central (0.8% vs. 0.5%), Middle Atlantic (0.6% vs. 1.0%), South Atlantic (0.3% vs. -0.6%), West North Central (0.2% vs. 0.8%), and East South Central (0.1% vs. -0.03%). To the downside, house prices fell m/m in three census divisions in February (vs. January): Pacific (-0.8% vs. 0.6%), Mountain (-0.7% vs. -0.02%), and West South Central (-0.1% vs. 0.9%).

Year-on-year house prices continued to gain in February. However, the pace of increase decelerated y/y in February (vs. January) in all of the nine census divisions. These were Pacific (0.9% vs. 3.6%), West South Central (2.1% vs. 2.8%), South Atlantic (3.2% vs. 4.1%), Mountain (3.5% vs. 4.3%), East South Central (3.7% vs. 4.4%), West North Central (4.2% vs. 5.0%), New England (6.1% vs. 7.5%), East North Central (6.5% vs. 7.0%), and Middle Atlantic (7.0% vs. 8.5%).

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

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- Feb. FHFA HPI +0.1% m/m (+3.9% y/y, lowest since June ’23); +0.3% m/m (+5.0% y/y) in Jan.
- House prices up m/m in six of nine census divisions but down in Pacific, Mountain, and West South Central.
- House prices up y/y in all of the nine regions, w/ the highest rate in Middle Atlantic (7.0%) and the lowest rate in Pacific (0.9%).


U.S. FHFA House Price Growth Continues to Decelerate in February

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Retail gasoline prices for all grades slipped to an average $3.26 per gallon (-13.7% y/y) in the week ended April 28 after falling to $3.27 in the prior week. Prices were $3.37 per gallon to begin the month but remained above their low of $3.13 in the week of December 9. An earlier high was $3.79 in the week ending April 22, 2024. The all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.51 per gallon (-11.0% y/y) in the week of April 28 from $3.53 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil rose to $63.09 per barrel (-24.8% y/y) in the week ended April 25, after rising to $62.50 per barrel in the prior week. Prices remained below a high of $91.45 in the week of September 29, 2023. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $62.05 per barrel. The price of European Brent crude oil edged up to $67.92 per barrel (-23.3% y/y) in the week of April 25 from $67.76 in the previous week. Prices remained well below a recent high of $95.61 in the week of September 29, 2023 and compared to a peak of $127.40 in the week of June 10, 2022. Yesterday the price was $66.13 per barrel.

Natural gas prices declined last week to an average $2.97 per mmbtu (+92.9% y/y) in the week ended April 25, after falling to $3.26/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday’s price was $2.96/mmbtu.

Gasoline demand slipped 0.4% y/y in the four weeks ending April 18 following a 3.4% y/y decline in the prior four weeks. Demand for all petroleum products improved 0.4% y/y in the four weeks ending April 18 after a 1.7% y/y decline in the previous four-week period. Crude oil input to refineries fell 1.3% y/y in the four weeks ending April 18 after a 1.6% y/y decline in the prior four weeks.

Gasoline inventories rose 1.2% y/y in the week ending April 18 after a 2.9% y/y rise in the week ending April 11. Residual fuel oil inventories fell 19.0% y/y in the week of April 18, after a 14.0% y/y fall in the prior week. Crude oil inventories rose 2.6% y/y in the week of April 18 after a 1.8% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories fell w/w to 26.4 days in the week of April 18 from 27.5 days in the prior. The recent low was 22.9 days in the week of November 8. The supply of crude oil also was unchanged w/w at 28.3 days in the week of April 18 for the third straight week, up from 24.6 days in the week of January 10 but remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices ease.
- Crude oil prices rise.
- Natural gas costs decline further.

U.S. Energy Prices Are Mixed in Latest Week

Robert Brusca

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Money growth trends and the major money center economies are not showing any clear indication toward economic weakness despite widespread pessimism on the part of economists and market prognosticators.

Money growth is accelerating as its growth speeds up over one year compared to its growth over either two or three years in the EMU, the United States, and the United Kingdom. Credit growth in the EMU also speeds up on this sequence- not usually a slowdown signal. The lone exception here is Japan where its fight against deflation is finally won and morphed into an inflation problem that the Bank of Japan is fighting with its usual gradualism. Japan’s money supply growth slows over two years compared to three years and over one year compared to two years. However, back in Europe, credit growth in the EMU is showing acceleration on this timeline. Japan is the only ‘slowdown signal.’

We can also peruse the growth rates for real money balances. The EMU, the U.S., and the U.K. show that ‘real money balance’ growth picks up for two-years compared to three-years and accelerates again over one year compared to two-years. Acceleration is in train as real money balance growth transitions from a shrinking profile to positive growth rates in these three countries. Japan is an exception here as it still logs all negative growth rates and these do get progressively weaker (-1.2% over three years to -1.5% over two years to -2.8% over one year).

**Shorter terms trends (for the skeptical)**
Within the one-year horizons (12-month to 6-month to 3-month), the annualized nominal growth rate in the EMU weaken from 3.4% over 12 months to 2.0% over three months, but real balance growth is nearly unchanged at 1.1% over 12 months compared to 0.9% over three months annualized. Real credit on these time sequences accelerates in the EMU. U.S. real M2 growth generally accelerates from 12-months to 3-months. The same is true for the U.K. but not as steadily. Japan’s progress shows growth rate declines but not getting progressively weaker.

Through all of this, nominal oil prices are steadily falling. While the pace of decline lets up over two years, the 3-year and 12-month growth rates are nearly identical.

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**The signal from money**
Money growth is looked on by some as a harbinger of the future via Milton Friedman’s old adage that it impacts the economy with long and variable lags. On that view, there is no slowing in the pipeline. Others look at money from a money demand standpoint. On that basis if money growth is still firm, they observe steady demand for money balances and infer steady economic growth. On that view, the lags in money are relatively immediate.

**One if by land...one if by sea**
Viewed either way, money growth rates are not signaling slower growth ahead except for Japan where the objective is to deflate the inflation balloon that had emerged. Despite all the hoo-ha about tariffs, we do not see in the data.

**What’s a firm to do?**
On that point, when times get tough for companies, economists often think that they distance themselves from their profit maximizing behavior and evolve into something different known as mini-max behavior. This model of behavior, derived from game theory, implies that firms are trying to make the decision that will minimize the bad effects on their company if they choose the wrong policy. It is a different slant than trying to choose the policy that they think will maximize profits. The mini-max policy is by its nature a defensive policy, however, in an environment where there is uncertainty rather than risk the plan is unclear. With uncertainty, it's unclear what policy a firm ought to produce because uncertainty implies that you don't know what the future will be and there is more than one option… to me implication of this is that firms are probably going to simply play out the string and wait to see what kind of risk emerges. Is the risk is going to be that inflation will rise? Is the risk going to be that the economy is going to get weak? Each of these scenarios would require a different reaction on the part of active firms. There's also a question about what Donald Trump is looking for. Does he want to really hike tariffs sharply to get tariff revenue? Or is he looking to use tariffs to get other countries to reduce their own tariff barriers? These are very different things and so it's very hard for firms to craft a new strategy let alone stick with the old strategy to attack it. I think the best assumption under these environmental options is that firms continue to move ahead cautiously rather than pull back sharply. In fact, that sort of behavior is what's reflected in current money supply growth rates.

Money Growth Rates Lean Against Slowdown Hypothesis

Tian Yong Woon

This week, we focus on the immediate impacts of the recent US-China trade escalation. As we discuss below these are already being exhibited in the data. While still within historical ranges, high-frequency estimates of US and China cargo trade volumes have begun to deteriorate (chart 1). In tandem with these volume declines, freight rates on certain Shanghai-to-US routes have fallen (chart 2), suggesting reduced shipping demand. This has been further corroborated by widespread reports of large-scale shipment cancellations from China to the US. A potentially clearer signal comes from South Korea’s trade data for the first 20 days of the month, often viewed as a bellwether for global trade. The figures point to a notable slump compared with a year ago (chart 3). More complete April data are expected later this week.

Turning to broader developments in China, we observe that the dominant shifts in the country's financial balances over the past decade have occurred between the general government and the private sector. In contrast, China’s foreign sector balance—essentially its current account—has remained relatively stable (chart 4). As we further discuss financial balances and the underlying causes of the US’ persistent current account deficit (chart 5) have been a recurring topic in recent conversations with clients in Asia. It is argued that the US dollar’s role as a global reserve currency effectively necessitates the US running a current account deficit. Consequently, attempts to narrow the deficit through tariffs may address symptoms rather than root causes. Finally, we revisit the China Plus One strategy adopted by firms since the initial US-China trade fallout in 2018. This approach has contributed to ballooning trade deficits between the US and some of its other major trading partners (chart 6), prompting renewed scrutiny under President Trump’s early “Liberation Day” trade actions.

**US and China cargo trade**
Financial markets have recently found some reason for relief, as both the US and China appear to be lowering the temperature on further trade tariff actions. Recent messaging has leaned more toward a de-escalation of trade tensions, though concrete details remain sparse, and it is unclear how or when formal negotiations might begin. That said, the substantial and mutually imposed tariffs between the US and China remain firmly in place, and a significant rollback does not seem likely in the near term. In the meantime the economic impact of these tariffs is beginning to surface in the data, as shown in charts 1 to 3. Chart 1, based on IMF estimates, shows a sharp decline in daily activity at several key ports involved in US-China trade. However, while the drop is notable, port activity still remains within historical ranges, so a more fundamental shift is not yet evident.

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**US-China freight rates**
Another indication of the impact of escalating US-China tensions is seen in global freight rates, as shown in chart 2. Freight costs on routes from Shanghai to New York and Los Angeles have dropped sharply—even before the most recent round of trade escalations—likely due to growing caution among shippers about what trade actions might come next for China. This decline contrasts with the year-end spike in shipping rates in 2024, which likely reflected front-loading of shipments in anticipation of potential US tariffs. Looking ahead, the outlook remains uncertain and potentially discouraging, especially following recent reports of widespread shipment cancellations from China to the US. These developments suggest that China-to-US shipping volumes may remain subdued or decline further over the near-term.

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**Trade indications from South Korea**
A perhaps firmer indication comes from South Korea’s trade figures for the first 20 days of April, widely regarded as an early signal of global trade trends. The data showed a notable slump compared to the same period last year, driven largely by a sharp drop in shipments to the United States. This move has made US-China trade increasingly difficult, aside from a few exemptions on key goods such as electronics and semiconductors. Even so, South Korea’s semiconductor export growth continued to slow in April, highlighting the broader fallout from ongoing trade tensions. More definitive trade data from South Korea are expected later this week.

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**Broader topics on China**
Next, we turn to broader structural trends in China’s economy, starting with chart 4, which depicts China’s financial balances based on its flow of funds accounts. Over the past decade, the general government has accumulated an increasingly large net deficit, as its sources of funds (liabilities) have consistently outpaced the uses of funds (assets). This has fuelled growing investor concerns over government indebtedness. In contrast, the private sector—particularly households—has seen a sharp rise in its net surplus, almost mirroring the government’s deterioration. Meanwhile, the foreign sector has continued to run net deficits with China, consistent with China maintaining a current account surplus with the rest of the world. That said, unlike in the 2000s and early 2010s—when private and foreign sector balances often moved closely together—recent shifts in the general government and private sector balances appear to have had a more limited effect on the foreign sector's position.

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**The US’ current account deficit**
Expanding on these themes, chart 5 highlights the persistent current account deficits of the US alongside the cumulative current account surpluses of its major trading partners. Some may advocate for reducing US imports—such as through tariffs, as President Trump is currently pursuing—as a way to close the current account deficit. However, such measures tend to address only the symptoms rather than the root causes. This topic featured prominently in client meetings in Singapore. Fundamentally, the persistent current account deficit in the US can be seen as a structural outcome of the dollar’s role as the world’s primary reserve currency. The global demand for dollar-denominated assets drives sustained financial inflows into the US, which, by balance of payments accounting, necessitates a corresponding current account deficit.

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**What China Plus One?**
Lastly, we turn to the China Plus One strategy, a diversification approach adopted by firms and governments since US-China tensions began during Trump’s first term in 2018. However, even this approach may no longer offer a full hedge against additional US trade actions. As chart 6 shows, the shift away from China has contributed to a sharp rise in the US trade deficit with several alternative partners, particularly Asian economies such as Vietnam. In light of the broader scope of US trade actions—exemplified by Trump’s recent “Liberation Day” tariffs—businesses are being forced to rethink their global strategies. Some may find themselves needing to reshore production to the US, despite the fact that labour cost advantages, technical know-how, and manufacturing infrastructure for many goods remain more competitive abroad.

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Asia

Economic Letter from Asia: How Freightening?

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**Retailing and Wholesaling continue to show wear and tear**
The United Kingdom’s distributive trades survey has four parts. There's a survey of retailing and a separate survey of wholesaling. Then for each one of these surveys, there's a module that addresses current conditions and another one that addresses expected conditions.

**Current Conditions vs. Expectations for the distributive trades**
In this month's report, the current conditions assessments improved in retailing but were mixed for wholesaling. Expectations in retailing and wholesaling were also mixed as to month-to-month changes, but the levels of the responses remained quite weak.

**The Specifics**
<u>Current Retailing</u>- Retail sales compared to a year ago improved sharply to a -8 reading in April compared to a draconian -41 in March. Orders compared to a year ago improved at a reading of -24 in April from -38 in March. Sales for the time of year improved to -31 from -36. Sales compared to a year ago have a below median 29.2 percentile standing, while orders compared to a year ago have a 16.9 percentile standing and sales evaluated for the time of year have a 12.3 percentile standing. In each case, the reading from April is below its median reading of the last 24 years. These readings as a collection are weak readings.

<u>Expected Retailing</u>- The expected results for retailing in the survey show mixed results. The reading for sales compared to a year ago at -33 in May is slightly weaker than -30 in April. Orders compared to a year ago improved to -29 in May from -41 in April. But the survey shows a deterioration in sales for the time of year at -38 in May compared to -35 in April. The rankings for these readings range between the 10.5 percentile and 4.2 percentile, range marking them as all extremely weak readings in their historic queue of standings.

<u>Current Wholesaling</u>- Wholesaling also generally shows slippage in April. Sales compared to a year ago fell to -33 in April from in -29 in March, while orders compared to a year ago improved to -32 from March’s -38. Sales for the time of year, which post a reading of -31 in April compared to a reading of -20 in March, demonstrated slippage again. The rankings for these readings range from 4.2 to 9.2 in percentile standing terms.

<u>Expected Wholesaling</u>- Turning to expectations, sales compared to a year ago nudged lower to -26 in May from -25 in April. Orders compared to a year ago improved nicely to a reading of -28 in May compared to -38 in April; expected sales for the time of year slipped to -28 from April’s -27. Several of these are small stumbles month-to-month. But these readings range from a low percentile standing of 7.7 percentile to a high standing at a 12.6 percentile – all weak metrics.

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**Summing up**
What is quite clear in all of these readings is that the standings are exceptionally low. There’s widespread, even if somewhat mixed, slippage in these readings. Current sales are somewhat of an exception with some monthly traction amid still very low readings. Yet, the United Kingdom has been an economy that has continued to fight against an inflation overshoot so that the Bank of England does not really have a great deal of flexibility in the conduct of policy. Still, the U.K. is geographically close to the European Monetary Union where rate reductions are still in train.

The U.K. continues to be at risk to the U.S. tariff plan even though the U.S. does not run a deficit with the U.K. in trade. Despite ‘The Formula’ that allegedly has been used to set reciprocal tariffs, the Trump administration has found some different wrinkle to generate a tariff on goods from the U.K. Given this evolving situation, it's not surprising that the expectations are continuing to erode in the U.K. distributive trades survey.

United Kingdom

U.K. Distributive Trades Survey: Weakness Lingers and Is Mixed

Andrew Cates

**Global growth**
Latest flash PMI readings reveal a widening gap in manufacturing performance across major economies. Europe remains mired in contraction, with both the UK and euro area registering PMI figures below the 50 threshold. The UK’s manufacturing sector is particularly under pressure, with the PMI dropping to a new low not seen in over a year—reflecting weak output and mounting challenges from both domestic uncertainty and external shocks, including the disruptive impact of recent US trade actions. While the euro area shows tentative signs of stabilization, with PMI readings inching higher, the recovery remains fragile. In sharp contrast, India’s manufacturing sector continues to outperform, with PMI figures climbing further and signalling resilient industrial momentum amidst global headwinds.

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**US capex intentions**
The latest reading from the US Philly Fed survey suggests a sharp drop in capex intentions among manufacturers in the Philadelphia region, likely reflecting growing uncertainty in the wake of the US administration’s surprise announcement of sweeping tariffs on April 2nd, 2025. This abrupt policy shift has rattled business confidence, echoing past episodes—such as during the 2008 financial crisis and early stages of the pandemic—when capex sentiment similarly plunged. The downturn underscores how policy-induced trade disruptions can swiftly chill investment appetite, particularly in manufacturing sectors exposed to global supply chains.

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**South Korean trade**
The fallout from President Trump’s “reciprocal” tariffs and the rapid escalation of the trade dispute with China is also now becoming evident in Asia’s trade data. South Korea’s trade figures for the first 20 days of April—often seen as a bellwether for global trade—fell sharply compared to the same period last year. The drop was led by a steep decline in exports to the United States, where tariffs on Chinese goods have surged to as high as 145%, effectively choking bilateral trade flows outside a narrow band of exemptions for strategic goods like electronics and semiconductors. Even these sectors are feeling the strain: South Korea’s semiconductor exports continued to decelerate in April, highlighting the broader collateral damage of deepening trade tensions.

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**Gold prices**
The latest escalation in US-China trade tensions is reverberating far beyond traditional trade channels. Market sentiment has deteriorated noticeably, weighed down by darkening global growth prospects and deepening uncertainty over the future of relations between the world’s two largest economies. The forced decoupling is also reshaping investor behaviour, particularly among Chinese investors, who are increasingly turning to stateless safe-haven assets like gold. This shift is evident in the surge in trading volumes on the Shanghai Gold Exchange and the steady climb in global gold prices—buoyed further by a weakening US dollar. The trend points to rising concern among Chinese investors about the geographic concentration of their wealth, as Washington’s increasingly hawkish posture prompts a reassessment of cross-border financial exposure.

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**The US dollar and market volatility** 
Recent sweeping US-led trade actions and a broader turn toward protectionism have sharply eroded the goodwill and soft power long associated with the US and its financial assets. As Washington becomes an increasingly prominent source of global instability, investor confidence in the US dollar as a safe-haven currency has weakened. This loss of faith is reflected across asset markets, with the dollar’s persistent and more entrenched decline against major currencies standing out as a clear signal of a broader reassessment of the US’s global economic role. Elevated market uncertainty reinforces this shift, as underscored by still-high—albeit slightly moderated—readings on the VIX volatility index.

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**Asia’s consumption**
Viewed in a broader context, the recent actions by the US may signal an effort to rebalance its economy—though whether this strategy is well-calibrated remains highly contested. As the issuer of the world’s dominant reserve currency, the US has long been ensnared in the so-called Triffin dilemma: global demand for dollar-denominated assets has sustained persistent trade deficits, gradually undermining the competitiveness of its domestic manufacturing and other tradable sectors. China, by contrast, grapples with the mirror image of this problem. Its growth model remains heavily anchored in manufacturing and external surpluses, and it is now under mounting pressure to pivot toward consumption-led growth—an imperative sharpened by the latest wave of US measures designed to curb Chinese export strength.

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Financial market volatility has remained elevated over the past several days as investors attempted to weigh a modest improvement in sentiment—driven by a potential, if partial, retreat by the US administration from its aggressive tariff stance—against a still-cloudy global outlook. Signals from flash PMI surveys on global growth remain mixed: Europe continues to stagnate, with the UK particularly weak, while India stands out with resilient and rising manufacturing activity (chart 1). In the US, most of the incoming data suggest that business confidence has faltered, with capital expenditure intentions plunging particularly sharply in the wake of the April 2nd tariff announcement (chart 2). The drag from trade tensions is, moreover, becoming more evident: South Korea’s exports have slumped, especially to the US, and even sectors granted exemptions—like semiconductors—are showing signs of strain (chart 3). These pressures are reverberating through financial markets as well, where Chinese investors are shifting into gold as a hedge, fuelling record trading volumes on the Shanghai Gold Exchange and lifting global gold prices (chart 4). Meanwhile, a broadly-based decline in the US dollar and persistently high readings on the VIX index arguably reflect a deeper reassessment of US assets as reliable safe havens amid mounting policy unpredictability (chart 5). Beneath these short-term ripples lie more entrenched structural challenges: the US is seeking to rebalance away from external deficits linked to its reserve currency role, while China is under growing pressure to pivot toward consumption-led growth—an imperative sharpened by American efforts to choke off its export strength (chart 6). In short, the latest softening in US trade rhetoric may offer brief relief, but the underlying economic, geopolitical, and structural crosswinds remain very much in play.

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Charts of the Week: Dollar Dips and Trade Trips

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The Federal Reserve Bank of Kansas City reported that its index of manufacturing sector activity declined to -4 during April from -2 in March, indicating a continued decline in factory sector activity. The index has been at zero or below since October 2022. This survey was taken between April 16-21.

Haver Analytics calculates an index based on the Kansas City results which is comparable to the ISM series. This index eased to 50.0 (NSA) from 51.4 in March. It compared to a low of 43.7 last July.

The new orders index of -11 this month compared to -12 in March. Thirty percent (NSA) of respondents reported higher orders while 37% reported a decline. Shipments improved to -2 from -4 and remained above -12 in December. Thirty-three percent (NSA) of respondents reported higher shipments while 28% reported a decline. Employment fell to -11 this month from -4 In March. It has been negative for three straight months. Thirteen percent (NSA) of respondents reported more hiring while 25% reported less. The average workweek index fell to -6 from +6 in March. Supplier delivery times surged to 13 from -1 as a higher 18% (NSA) of respondents reported a quickening of delivery speeds and a lessened 2% indicated a slowdown. Finished goods inventories rose to +5 from -8 in March, indicating the greatest rate of inventory accumulation in four months. Materials inventories weakened to -5 in April from +4 in March.

Inflation indicators strengthened in April. The prices paid index for finished products jumped to 29 from 15 in March. It was the highest reading in almost three years, up from a low of -3 in July 2023. Thirty-four percent (NSA) of respondents reported higher prices while none paid less. The raw materials index held at 42, up from a low of -1 in October 2023.

The composite index of expectations six months ahead fell to 6 in April from 10 in March. It was below a high of 17 in December. Expectations for future shipments fell to 9 this month, down from 31 in December. Orders expectations also weakened significantly, with the index falling to a minimal 3 from 20 in March. The employment reading of 1 compared to zero in March and 19 in December. Expectations continue to be for higher prices. The expectations index for finished goods prices jumped to 59, a roughly three-year high, from 39 in March. Raw material prices jumped to 71 in April, also a three-year high, from 57 in March.

The latest survey was conducted between April 16-21, 2024 and included 97 responses from factories in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.

The Fed’s latest **Beige Book** covering regional economic conditions is available [here](https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20250423.pdf).

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- Index has moved sideways for over two years.
- Most components remain negative.
- Prices paid reading surges.

Kansas City Fed Manufacturing Activity Index Declines in April; Expectations Diminish

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

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