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)

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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

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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

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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
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- 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

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Visualization with GGPlot2 and data analysis

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Session 6: Cointegration and error-correction models

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

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Haver partners with Clear Future Consultants 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

Lower supply-chain pressures—falling commodity prices

Tom Moeller

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The U.S. trade deficit in goods and services (BOP basis) increased to $74.6 billion in April from $60.6 billion in March, revised from $64.2 billion. Earlier figures also were revised. A $75.6 billion deficit had been expected in the Action Economics Forecast Survey. Exports fell 3.6% (-1.5% y/y) after increasing 1.8% in March, revised from 2.1%. Imports rose 1.5% in April (-4.5% y/y) after a 1.6% March drop, revised from -0.3%.

The widening of the goods & services deficit in April reflected a deeper goods trade deficit of $96.1 billion compared to $81.6 billion deficit in March. Goods exports fell 5.3% (-4.9% y/y) after a 2.5% increase. Imports of goods rose 2.0% (-6.7% y/y following a 1.9% decline. The services trade surplus improved to $21.6, its highest level since March 2021, from $21.0 billion. Exports of services edged 0.2% higher (6.4% y/y), the same as in March. Imports of services fell 0.6% (+6.3% y/y) in April after easing 0.2% in March.

The real (inflation-adjusted) goods trade deficit deepened to $95.8 billion (chained 2012 dollars) from $82.3 billion in March. Real exports fell 5.6% (-0.8% y/y) following a 3.0% increase while real imports rose 2.4% (-2.1% y/y) after a 0.8% decline.

The Customs value goods trade deficit deepened to $97.1 billion in April after narrowing to $82.5 billion in March. Exports fell 5.3% (-5.6% y/y) following a 2.2% increase. Exports of food, feeds & beverages rose 0.3% (-16.5% y/y). Auto exports slipped 0.2% (+9.2% y/y) while nonauto consumer goods exports fell 7.6% (+1.7% y/y). Capital goods exports eased 0.7% (+4.2% y/y) while exports of industrial supplies and materials slumped 9.4% (-16.1% y/y). Customs value imports rose 2.1% (-6.6% y/y) in April following a 1.9% March drop. The rise was led by a 5.6% increase (10.1% y/y) in auto imports. Nonauto consumer goods rose 2.8% (-11.8% y/y) while industrial supplies imports rose 3.2% (-15.7% y/y). Imports of foods, feeds & beverages fell 2.6% (-8.6% y/y). Petroleum imports fell 3.0% (-24.7% y/y) in April while nonpetroleum imports rose 2.6% (-4.9% y/y).

The 0.2% increase (6.4% y/y) in services exports reflected a 3.3% increase (24.8% y/y) in travel exports and a 1.4% increase (1.0% y/y) in financial services. Services imports eased 0.6% (+6.3% y/y) as travel imports fell 1.7% (+32.7% y/y), and transport services fell 3.6% (-11.1% y/y).

The goods trade deficit with China deepened to a seasonally adjusted $24.2 billion in April from $22.6 billion in March. Exports fell 2.6% (+12.6% y/y) while imports rose 3.2% (-18.7% y/y). The goods trade deficit with the European Union widened to $17.3 billion in April from $15.6 billion in March. The trade shortfall with Japan deepened to $6.8 billion, its largest since January 2022.

The international trade data, including relevant data on oil prices, can be found in Haver's **USECON** database. Detailed figures on international trade are available in the **USINT** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Deficit is largest in six months.
- Exports fall sharply while imports rise.
- Goods trade deficit widens; services surplus increases.

U.S. Trade Deficit Deepens in April

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Mortgage loan applications fell 1.4% (-32.5% y/y) in the week ended June 2 after declining 3.7% in the prior week. Applications remained at their lowest level since late February, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.

Applications for loans to purchase a home fell 1.7% (-27.1% y/y) following a 2.5% decline in the prior week. It was the fourth consecutive weekly shortfall. Applications to refinance an existing loan eased 0.7% (-42.3% y/y) after weakening 6.9% in the prior week. It also was the fourth straight weekly drop.

The share of loans to refinance an existing mortgage last week rose to 27.3% and recovered the prior week’s decline. The share of loans with an adjustable rate held steady at 6.8%.

The effective interest rate on a 30-year fixed rate loan fell to 7.00% in the week ended June 2 after increasing to a six-month high of 7.15% in the previous week. The rate on a 15-year fixed-rate mortgage declined to 6.40% last week from 6.62% in the prior week. The rate on a 30-year Jumbo loan fell to 6.90% from 7.01% in the prior week. For a 5-year ARM loan, the effective rate increased to a record 6.29% from 5.56% in the week prior.

The average size of a mortgage loan fell 2.5% (+0.3% y/y) to $381,200 in the week ended June 2, from $391,000 in the prior week. The average size of a purchase loan declined 2.2% (+0.7% y/y) to $429,700 in the latest week, from $439,400. The average size of a refinanced loan declined 2.6% (-10.6% y/y) to $251,800 last week from $258,400 in the prior week.

The Mortgage Bankers Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's **SURVEYS** database.

- Mortgage applications post their fourth consecutive weekly decline.
- Interest rates slip following sharp increase.
- Average loan size declines.

U.S. Mortgage Applications Decline Further; Rates Ease

Robert Brusca

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OECD leading indicators show mostly weakness but mixed performance among the top regions. The level of economic performance grades as consistently weak or very weak while various measures of momentum are mixed.

**Recent momentum**
Month-to-month in May the OECD 7, the European Big 4 and the U.S. show essentially unchanged normalized leading indicators while Japan ticks up by 0.1% as does the index for the Asian Major 5 (China, India, Indonesia, Japan, and South Korea). Over three months, the OECD-7 index falls by 0.1% and the U.S. index falls by 0.6%. But rising by 0.6% is the European Big 4 and the OECD Japan; the Asian Major-5 index is rising by 0.9%. Over six months, the OECD-7 index has been flat. The U.S. index is down by 0.5%, Japan's index is up by 0.2% while the Asian Major-5 index is up by 0.7% and Europe's Big-4 index is up by 0.9%. The broader 12-month change indexes show declines for all the metrics except for Japan; it is flat over 12 months.

**Normalized index standings are weak**
These normalized indexes all have standings that are below their midpoints (below the 50-percentile mark). Japan comes the closest to being near its neutral mark with a 48.3% standing. After that, the Major 5 in Asia have a 28.4 percentile standing, but then the U.S. reading has a 14.7 percentile standing, the OECD 7 has a 12-percentile standing and Europe's Big 4 have an 11.6 percentile standing. All the major groups show weakness; Japan, viewed in isolation, is closer to a neutral reading and it is the only comparison like that.

**Six-month changes**
The OECD expresses the preference to look at its indicators over six months. In the second panel of the table, we see changes in the 6-month averages that show declines in May for all these groups except for the Europe Big-4 measure that is up by 0.1% and for China that is up by 0.6%. A month ago, all the readings were negative except for China with a 0.4% reading. Looking at point-to-point 6-month changes on intervals of 6-months, we see many more negative readings although the recent 6-months show an increase in Europe’s Big 4 (of 0.9%) and a gain in Japan. There are 6-month declines in the U.S. and in China and with the OECD-7 measure flat. But 6-months ago the 6-month point-to-point changes show all negative readings and for 12-months ago the six-month changes are all negative except for Japan (at 0.1). Mixed 6-month results are a new phenomenon.

The bottom panel of the table looks at the amplitude adjusted readings in level format. In terms of levels, only Japan has a reading above 100 in May, indicating that it is above its adjusted trend. China has a reading in the table above 100 and its colored red because the underlying data are below 100 but round up to 100. What you see in this panel of the chart is a persistence of indexes languishing below 100 that signal performance is below trend values. On the far right, we have queue standings for the levels and again all of them are below the 50th percentile mark. Japan has the strongest reading at a 48th percentile standing along with Germany; China logs a 44.5 percentile standing. All the rest are more substantially below the 50% mark indicating weakness and below trend growth.

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**Selected developing economies**
Table 2 (below) presents the amplitude adjusted readings for 8 developing economies. The diffusion readings show that there are slightly more increasing than decreasing leading economic indexes among the developing economies in April and May. March was a toss-up with mixed readings and a 50% split.

Growth rates show only India, South Africa, and South Korea, with persistent negative readings, while China and Turkey have persistent positive readings. Turkey manages to do this while continuing to run an enormous inflation rate. The diffusion readings show us going from 12-months to 6-months to 3-months with indexes generally improving rather than deteriorating. However, the average level of the indexes shows only Mexico and Turkey with indexes of over 100 (expressed in black type-, Column 7). The rest are below 100 or only statistically round up to 100 for a number below it. Six-months ago (ratio to six months ago) showed improvement in progress in Mexico, Turkey, and China. Turkey and China also posted those signals 12-months ago. The percentile rankings continue to show a great deal of weakness but only Turkey is above its 50% mark although South Africa and Mexico along with China have readings in their 40th percentiles. Brazil has a reading in its 32.7 percentile. The countries with the weakest amplitude adjusted leading indicators are India, Indonesia, and South Korea.

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**Summing up**
On balance, the leading economic indicator data show a lot of unevenness across regions and countries rather than a clear picture of a global economy that is either weakening or strengthening. Given the elevation of inflation and the fact that central banks are raising rates and that a number of manufacturing sectors have been quite weak, it is surprising that there is so much resilience in the leading economic indicators even across developing economies. It does not look as though the die is yet cast for what the future will look like although data from the U.S. continue to show stubborn inflation and despite some strong job market data there has also been a significant rise in the United States unemployment index that has yet to raise any eyebrows. This is clearly a time for vigilance and to be nimble about creating outlooks and investment strategies for the times. The times clearly are changing. Unfortunately, it is hard to tell exactly how the times are changing, but there is a great deal of turbulence and a lack of uniformity. This is what calls for open-mindedness and nimbleness on the part of investors.

OECD LEIs Tilt to Continued Weakness

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Retail gasoline prices dipped to $3.66 per gallon (-26.6% y/y) last week from $3.68 per gallon during the prior week. This average price for all grades of gasoline remained above the $3.20 low in the last week of December, but they were below the high of $5.11 per gallon in the second week of June 2022. The retail price of diesel fuel fell to $3.80 per gallon (-33.4% y/y) from $3.86 in the prior week and well below the peak of $5.81 averaged in the third week of June 2022. It was the lowest price since the fourth week of January 2022.

The price of West Texas Intermediate crude oil price fell to $69.85 per barrel (-40.0% y/y) in the week ended June 2 from $72.64 per barrel in the prior week. It was the lowest price since the fourth week of March. They remain below a recent high of $81.87 in the second week of April and $120.46 per barrel in the second week June 2022. Yesterday, the price was $72.15 per barrel. Brent crude oil prices declined to $73.89 per barrel (-40.5% y/y) from $76.48 in the prior week, well below the $127.40 peak in mid-June 2022. Yesterday, the price was $76.61 per barrel.

The price of natural gas fell to $1.93/mmbtu (-77.4% y/y) in the week ended June 2 from $2.18 in the previous week. The price was the lowest since the second week of October 2020. Prices have fallen from their recent high of $6.78/mmbtu in the third week of December and from $9.56/mmbtu in the last week of August of 2022. Yesterday, the price was $1.92/mmbtu.

In the four weeks ended May 26, gasoline demand rose 3.5% from a year ago after increasing 2.5% in the prior week. Demand for all petroleum products rose 2.3% in the latest four weeks, down from 2.8% in the week prior. Crude oil input to refineries edged 0.1% higher from a year ago.

Gasoline inventories fell 1.3% y/y in the week of May 26. Crude oil inventories fell 13.4% from a year ago. Inventories of distillate fuel oil rose 0.2% y/y and residual fuel oil inventories rose 22.9% y/y.

Measured in days’ supply, gasoline inventories in the week ended May 26 eased to 23.5 days from 23.9 days in the previous week. It was the lowest level since the second week of November. The supply of crude oil held steady at 28.7 days, still above its low of 25.3 days at the end of June 2022.

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

- Gasoline prices reverse prior week’s increase.
- Crude oil & natural gas prices decline sharply.
- Petroleum demand increases.

U.S. Energy Product Prices Fall in Latest Week

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German orders in April fell by 0.4% in April as foreign orders led the way lower on a 1.8% month-to-month decline. Domestic orders rebounded from a steep decline in March to rise by 1.6% month-to-month. Both foreign and domestic orders had fallen sharply in March. Foreign orders fell by 13.1% and domestic orders fell by 7.7% even though February had produced strong gains in both categories. Over three months both foreign and domestic orders now are showing steep declines.

**German real orders**
The sequential growth in orders for Germany shows deterioration although not a progressive deterioration across the board. Orders fall by 10% over 12 months. The annual rate picks up to a -14.6% annual rate over six months and then further accelerates to -26.3% over three months. This deterioration is led by foreign orders with a 12-month percent change at -10.7%. The annual rate drop over six months is nearly twice that at a -20% pace and the 3-month decline nearly twice that at a -37.3% pace. Domestic orders follow suit with weakness but are not sequentially worsening. Domestic orders fall by 8.8% over 12 months, then reduce their pace of slippage with a -6.2% annual rate fall over six months, then reaccelerate to a -7% pace over three months, a pace of decline that is a slightly faster drop than over three months but still less than the 12-month pace. On balance, the picture of the German economy is quite clear: weakening over all horizons is in progress and the weakening is worsening overall led by a significant worsening of foreign orders.

**Real sales**
Sector sales in manufacturing show progressive deterioration from a gain of 3.1% over 12 months to a decline at a 3.7% annual rate over six months and a decline at a faster, 7.7% annual rate over three months. Consumer goods contribute to this secular deterioration and deceleration with a 4.4% decline over 12 months, a -5.3% pace over six months and a -6.3% pace of decline over three months. Capital goods follow suit as well. However, they post a strong 13.9% gain over 12 months that quickly dissipates to a -0.8% annual pace of decline over six months and a -13.7% pace over three months. Intermediate goods break the pattern; they show a -4.5% pace of decline in sales over 12 months and a worsening -6.1% pace of decline over six months, but then intermediate goods sales increase by 0.8% at an annual rate over three months. Even though the picture is clear that sales are weakening and for the most part they are deteriorating, the deterioration for consumer goods is caused by nondurable goods whereas consumer durable goods sales are showing acceleration, but not enough to impact and reverse the secular decline in the headline pace of sales for consumer goods overall.

**Industrial Europe**
The EU industrial confidence measures for Germany, France, Italy, and Spain show declines for all four countries in April as well as in March. All four confidence measures worsen in April compared to March. The average EU confidence indicators show worsening in confidence in the 6-month average compared to the 12-month average for all four countries; however, for 3-months compared to 6-months, there is less weakness registered for Spain, for Italy, and for France. Only Germany shows period-to-period deterioration; however, over three months Germany alone shows a net positive reading while the other three countries show negative readings (but negative readings that are smaller over three months than they were over six months on average).

**Q2 now in progress**
April brings us the first reading for the second quarter. To start the second quarter, conditions show negative growth in Germany for total orders, for domestic and foreign orders, and for all the sector sales categories except for sales of consumer durables. The queue percentile standings on the EU industrial measures for Germany, France, Italy, and Spain show only France with a standing that's below its median - that is below a standing of 50%. However, Italy is marginally above 50% with a 53.6 percentile standing.

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**Summing up**
This report for Germany is clearly weak. It's weak overall, it's weak for foreign orders, and for domestic orders, it shows weakness in sales, that is pretty much across the board. In addition to weakness, it shows broad sequentially deteriorating conditions. The industrial confidence data from the EU shows that the four largest countries in the European Monetary Union share this industrial weakness with all four of them showing negative readings for both April and March on this metric. The German order and sales data are inflation-adjusted and their signal about Germany economy orders and sales is poor. In addition, weak European conditions based upon the EU survey are good reasons to have concern about the future.

Germany

German Orders Continue Their Steady Melt

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Business activity in the service sector of the U.S. economy weakened last month, according to the Institute for Supply Management. The ISM Services PMI fell to 50.3 in May from 51.9 in April. It represents a retreat from more positive readings at the beginning of the year, after a low of 49.2 in December of last year. The index stands well below its peak of 67.6 in November 2021. A reading above 50 represents an increase in activity. The Action Economics Forecast Survey expected 52.5 for May.

Haver Analytics constructs a composite index combining the services index and the manufacturing reading released on Thursday. This index declined to 49.9 in May after rising to 51.4 in April. These readings remain down from the record 66.9 in November 2021. The series dates back to July 1997.

In the latest services survey, the new orders index fell to 52.9 from 56.1 in April. The index remained below a record 69.2 in October 2021. A lessened 23.4% of respondents reported more orders while a higher 16.2%% reported a decline. The supplier deliveries index fell to 47.7 (NSA) last month after increasing to 48.6 in April. Nine percent of respondents (NSA) reported faster delivery speeds while 4.3% reported slower speeds. The business activity reading weakened to 51.5 in May from 52.0 in April. Twenty percent of respondents reported activity improvement while 15.2% reported a lessening.

The employment index declined to 49.2 in May from 50.8 in April. It was the lowest reading since October, down from a February high of 54.0. A lessened 19.4% of respondent reported more hiring while an increased 18.7% reported less.

The prices index fell to 56.2 in May after rough stability at 59.6 in April. The index stands well below the record 84.5 in December 2021 and at the lowest level since May 2020. A lessened 24.9% of respondents (NSA) reported price gains while a higher 5.9% reported price declines.

Additionally, the new export orders index slipped to 59.0 in May after recovering to 60.9 in April. The reading remains positive, after plunging to 43.7 in March. The imports index fell to 50.0 from 51.3 in April. The backlog of orders index tumbled to 40.9 last month from 49.7 in April. It remained down from a record 67.3 in October 2021 and stood at the lowest level since May 2009. Working the other way, the inventory change index surged to 58.3 from 47.2 in April, representing a large degree of inventory accumulation. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

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- Composite index declines to lowest level in six months.
- Each component series weakens.
- Prices index falls to three-year low.


U.S. ISM Services PMI Falls Below Expectations in May

Winnie Tapasanun

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Total factory orders increased 0.4% m/m (0.2% y/y) in April after a 0.6% gain in March (+0.9% originally) and a 1.7% drop in February, according to the U.S. Census Bureau. A 0.8% m/m April increase had been expected in the Action Economics Forecast Survey. The April m/m rise was the second successive monthly gain and the third in five months. Factory orders excluding the transportation sector fell 0.2% (-2.2% y/y), the fifth m/m fall in six months, on top of a 1.0% March decline.

Durable goods orders rose 1.1% (4.2% y/y) in April after a 3.3% increase in March (+1.1% for Apr. unrevised from the advance report on May 26). The April rise reflected m/m orders increases of 3.7% (13.8% y/y) in transportation equipment, 1.0% (1.1% y/y) in machinery, and 0.1% (1.8% y/y) in furniture & related products. To the downside, orders for electrical equipment, appliances & components (-1.7%; +3.6% y/y), computers & electronic products (-1.4%; +1.8% y/y), and primary metals (-0.6%; -3.3% y/y) posted their m/m decreases in April. Orders for fabricated metal products were virtually unchanged m/m (-2.1% y/y) following two straight monthly increases.

Nondurable goods orders, which equal nondurable goods shipments, dipped 0.1% (-3.3% y/y) in April, the fifth monthly decline in six months, after a 1.8% decrease in March. The April easing reflected m/m declines of 0.7% (-3.9% y/y) in textile products, 0.7% (-3.6% y/y) in plastics & rubber products, 0.5% (+1.1% y/y) in paper products, 0.4% (-7.7% y/y) in textile mills, 0.4% (-0.4% y/y) in food products, 0.4% (+1.5% y/y) in basic chemicals, 0.4% (+4.7% y/y) in leather & allied products, and 0.1% (+2.5% y/y) in printing. To the upside, nondurable goods shipments for the following groups registered m/m increases in April: apparel (5.5%; 2.7% y/y), petroleum & coal products (0.6%; -15.7% y/y), and beverage & tobacco products (0.4%; 13.3% y/y).

Total shipments slid 0.4% (-0.5% y/y) in April, the fifth m/m slide in six months, on top of a 0.6% decline in March (-0.1% originally). Excluding transportation, shipments fell 0.2% (-1.7% y/y), down for the fifth time in six months, after a 1.1% March drop. Shipments of durable goods industries fell 0.7% (+2.8% y/y), the second m/m fall in three months, reversing a 0.7% March increase. The April fall reflected m/m shipments drops of 1.8% (+7.0% y/y) in transportation equipment, 1.5% (+8.0% y/y) in electrical equipment, appliances & components, 1.3% (-4.6% y/y) in wood products, 1.0% (+0.2% y/y) in furniture & related products, 0.5% (-2.7% y/y) in primary metals, 0.4% (+1.0% y/y) in miscellaneous durable goods, 0.3% (-0.8% y/y) in fabricated metal products, and 0.2% (+2.1% y/y) in computers & electronic products. In contrast, shipments for machinery (0.9%; 4.0% y/y) and nonmetallic mineral products (0.3%; 1.0% y/y) posted their monthly gains in April.

Unfilled orders rose 0.8% (5.2% y/y) in April, the fourth m/m rise in five months and the largest since January 2022, after a 0.4% rebound in March. Excluding transportation, unfilled orders were essentially unchanged m/m (0.3% y/y) after a 0.1% March uptick. Backlogs of durable goods also rose 0.8% (5.2% y/y), reflecting rises of 1.3% (8.5% y/y) in transportation equipment, 0.3% (4.2% y/y) in electrical equipment, appliances & components, and 0.2% (-5.9% y/y) in furniture & related products.

Inventories grew 0.5% (2.1% y/y) in April, the first m/m increase in three months, following a 0.8% decrease in March. Excluding transportation, inventories dipped 0.1% (+2.3% y/y), the third consecutive m/m easing, following a 0.3% March decline. Durable goods inventories rebounded 1.0% (2.6% y/y) in April, the fourth m/m increase in five months, while nondurable goods inventories fell 0.3% (+1.2% y/y), the fifth m/m fall in six months.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- April new orders (+0.4%) and durable goods orders (+1.1%) both up for the second consecutive month, while nondurable goods orders (-0.1%) and shipments (-0.4%) post their fifth m/m decline in six months.
- Unfilled orders grow 0.8%, the fourth m/m increase in five months and the biggest since Jan. ’22.
- Inventories rebound 0.5%, the first m/m rise since January.


U.S. Factory Orders Rise for the Second Straight Month in April

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The Standard and Poor’s Global composite PMI data for May show some degree of resilience. Among the 22 countries and regions featured in the table, the average composite PMI rating rises to 53.5 in May from 51.5 in April. The median reading rises to 54.0 from 53.8. There are only two jurisdictions with readings below 50 indicating contraction; this compares to three in April. For both months, the readings on the number of contractions are quite low. However, the number showing slowing rises to 11 in May compared to 5 in April.

**U.S. trends diverge- The fork in the road...**
To avoid confusion, let me point out that I have presented both U.S. measures in the exhibits. In the table (below), for comparability, I have the U.S. composite as presented by S&P so it's completely comparable with everything else in the table. However, in the chart at the top, I present the U.S. nonmanufacturing or services PMI from the ISM, the survey I prefer. The ISM is showing much more weakness in the U.S. than the S&P reading on the services sector. The chart reveals significant weakening in the U.S. compared to other members whose surveys are based on S&P data. The S&P survey shows some strengthening in the U.S. for the composite, not just less weakness.

**S&P readings show resilience overall...**
The data in the table also showed that the average reading is increasing sequentially: from 12 months to 6 months to 3 months from 51.6 over 12 months on average to 52 over 6 months on average to 53.3 over 3 months on average. The median region also increases from 51.2 over 12 months to 51.8 over 6 months to 53.5 over 3 months. S&P data are consistent with the notion that there's been some firming in the global indexes and a back-off in activity in the manufacturing sector. 

Still, there is little evidence of composites showing contraction. The number of jurisdictions with readings below 50 over 12 months is five, the same as for 6 months; that number diminishes to 3 over 3 months. The number readings that are slowing over 12 months compared to 12-months ago is 20; the number slowing over 6 months compared to 12 months is 7; the number slowing over 3 months compared to 6 months is 3. In terms of either slowing or outright contraction, both approaches show that there is less weakness in train according to the S&P readings applied to sequential data. Recall that the monthly data do show that there's a more significant broad slowing in May compared to April, but that's on the month-to-month comparison alone.

****Percentile standings have become more midrange****
Percentile standings based on the queue method of assessment show only three jurisdictions with readings below their medians since January 2019. Those three are Sweden which is exceptionally weak with the 2% standing, Egypt with a 36.7 percentile standing, and France with a 40.8 percentile standing. All the rest have standings that are above their historic medians which means they have queue percentile standings above the level of 50. India in May logs its highest composite PMI reading since January 2019; Japan logs a 98-percetile standing on the same period.


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**Is resilience, new real, or an illusion?**
This past Friday the United States issued an employment report for May that has put the markets back on their heels as the job gains in that report were stronger than expected. In the U.S., markets have repriced and are no longer looking for the Fed to cut interest rates before the end of the year. The global economy appears to be responding much the same way, showing this as a period of some resiliency. However, the picture is still not crystal clear; in the U.S., the unemployment data for May also showed a jump in the rate of unemployment even as it showed strong wage gains and very strong job gains. S&P Global PMI data continue, for the most part, to show very weak manufacturing standings and the composite indexes tend to be driven by their services components which, in turn, tend to be driven by job market features which have continued to be strong. Do we really want to be guided by that?

**If growth is unsustainable, it won’t be sustained!**
This seems to be a situation in which things are going to be strong until they aren’t, which isn't a very satisfying way to look at things. I am not as convinced that the proper interpretation of the U.S. data for May is that the U.S. or global economies are more resilient. The U.S. economy has been more resilient and now it's starting to show some strain in terms of a rising rate of unemployment. There has been more weakness in manufacturing, and we've also seen layoffs particularly in the tech sector. There are clear signs of erosion sprinkled in among the somewhat late admissions by some analysts that the economy has been more resilient than expected. Globally economies have been showing service sector resilience for some time; there's nothing particularly new about it. What is new is that markets have given up fighting the Fed…What is so surprising about the resilience is that we've seen this U.S. and global resilience occur even as U.S. and global interest rates have moved up significantly. We also get mixed signals from the inflation data where PPI inflation generally has fallen globally relatively sharply while global CPI data - particularly for core or ex-energy measures – has tended to show that inflation is stuck at a relatively high level. Clearly, the global economy has cross currents. As we well-know from previous recessionary episodes, once a certain level of weakness is ‘tripped,’ and as an economy heads for recession all bets on resilience are off. I view this as a time to be cautious about assessing current economic conditions and about thinking that we know what comes next…or when it comes.

Global Composite PMIs Show Resilience; U.S. Is an Exception

Andrew Cates

**Supply chain pressures and commodity prices**
Incoming data over the last few weeks mostly suggest that inflationary pressures are receding. A key reason for this concerns the trends in chart 1 below. According to an index calculated by the New York Fed, global supply chain pressures were more than 4 standard deviations above normal at the end of 2021. Fast forward to May 2023, and they are now estimated to be nearly 2 standard deviations below normal. Consequently, the intense upward pressure on commodity prices caused by these supply chain issues has also reversed, as evidenced by the deflation that can be observed in the CRB index of late.

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**Europe’s upstream price pressures**
Those trends, in turn, are also generating downward pressure on producer prices, which tend to be a key leading indicator for consumer price inflation. This is evidenced in chart 2 below showing a 95% correlation between PPI inflation (advanced by 3 months) and CPI inflation in the euro area over the past 20 years. This week’s data showed that PPI inflation rose by just 1% in the year to April down from around 43% y/y last August. That bodes extremely well for the likely evolution of CPI inflation in the euro area in the period ahead.

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**China’s trade**
China's trade continues to play a crucial role in the global economy. That’s why this week’s trade data for May were concerning. More specifically China’s exports fell by 7.5% from a year earlier in May while imports were down 4.5%. Abstracting from month-to-month volatility and the overall trends, moreover, can best be described as pedestrian, as evidenced in chart 3 below.

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**Investors’ growth expectations**
The Sentix survey measures the overall sentiment and expectations of financial market participants, particularly investors, regarding the future prospects for the world economy and financial markets. And this month’s survey revealed that those expectations remain fragile. Growth expectations in the US and euro area admittedly perked up a little, but from a very weak base. Meanwhile, and in sympathy with the message about China’s trade above, expectations regarding growth in Asia took a turn for the worse, albeit from a slightly higher base.

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**US inventories**
The fragilities in the world economy are probably one reason too why the odds of a recession outcome for the US economy in the period ahead remain high. Indeed the latest surveys from the Institute of Supply Management (ISM) suggest the manufacturing sector may already be in recession and that activity in non-manufacturing slowed sharply in May. Both sectors, moreover, revealed acute inventory imbalances, as evidenced in chart 5 below. Rising inventory levels potentially indicate excess supply, heightened financial strain and ebbing profitability with ripple effects for the broader economy.

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**The Green Energy Transition**
On a completely different note, our final chart this week homes in on Asia's transition to a green economy. That transition requires a shift away from fossil fuels and high-carbon industries, but the rapid growth of sectors like manufacturing and construction in the region presents challenges in terms of transitioning to cleaner alternatives. As shown in Chart 6 below, coal remains a relatively affordable energy source in the region. This affordability, coupled with its widespread availability, has resulted in heavy reliance on that commodity in the area. Limited financial resources further complicate the shift from coal to renewable energy sources, requiring significant investments and substantial support from policymakers.

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Financial market sentiment has continued to improve in recent days despite conflicting signals from the economic data flow. This improvement can be traced, in part, to the removal of uncertainty surrounding the US debt ceiling. However, as indicated by our first two charts this week, there is now growing evidence to suggest that headline inflationary pressures are receding in most major economies, which could have been a further contributing factor. Nevertheless, as our next three charts this week also suggest, the world economy is not yet out of danger. Among other potential negatives, this week's data flow signalled a big slowdown in export growth in China (chart 3), still-fragile growth expectations from the global investor community (chart 4), and increasing inventory imbalances in the US economy (chart 5). Lastly, and on a completely different and more structurally-rooted note, our final chart this week looks at some of the challenges Asian economies face in their transition to a Green economy (chart 6).

Charts of the Week (June 9, 2023)

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