Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	  <br>
      
      <span id="articletext">
      <p></p>

      <p><a href="/comment/161003f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003f.png"></a>
      <a href="/comment/161003g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003g.png"></a></p>

<p align="justify">The value of construction put-in-place fell 0.7% (-0.3% y/y)
during August following a 0.3% July dip, revised from little change. The value
of construction spending has been moving sideways since the middle of last
year, following strong gains from 2012 through 2015. A 0.3% August
increase had been expected in the Action Economics Forecast Survey.</p>

<p align="justify">Building activity in the private sector eased 0.3% (+2.7%
y/y), reflecting a 0.3% dip (+1.4% y/y) in residential construction which
followed a 0.5% rise. Single-family building fell 0.9% (-1.5% y/y), pushing it
down 5.7% below the peak nine months ago. The value of improvements eased 0.3%
(+1.5% y/y). To the upside, the value of multi-family building jumped 2.4% (13.9% y/y).</p>

<p align="justify">Nonresidential building activity declined 0.4% (+4.2% y/y)
following a 1.0% jump. It was the first drop since April. Office building jumped
2.3% (28.0% y/y) while amusement construction improved 2.1% (18.8% y/y).
Offsetting these gains was a 2.0% drop (+6.9% y/y) in commercial construction,
and a 1.4% drop (-7.4% y/y) in factory construction.</p>

<p align="justify">The value of public sector building activity declined 2.0%
(-8.8% y/y), the fifth decline in the last six months. Transportation building
declined 8.8% (-13.5% y/y). Highways &amp; streets construction fell 2.9% (-8.3%
y/y), off 12.3% from its January peak. Education building improved 0.4% (-0.8%
y/y), and office construction ticked 0.1% higher (-3.7% y/y).</p>

<p align="justify">The construction spending figures are in Haver's <b>USECON</b>
database and the expectations figure is contained in the <b>AS1REPNA</b> database.</p>

 <p><a href="/comment/161003h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003h.png"></a>
      <a href="/comment/161003i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003i.png"></a></p>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

  <thead>
    <tr>
      <th class="firstcol" scope="col" >Construction Put in Place
        (SA, %)</th>
      <th scope="col" >Aug</th>
      <th scope="col" >Jul</th>
      <th scope="col" >Jun</th>
      <th scope="col" >Aug Y/Y</th>
      <th scope="col" >2015</th>
      <th scope="col" >2014</th>
      <th scope="col" >2013</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td class="firstcol" >Total</td>
      <td  >-0.7</td>
      <td  >-0.3</td>
      <td  >0.9</td>
      <td  >-0.3</td>
      <td  >10.3</td>
      <td  >11.4</td>
      <td  >6.3</td>
    </tr>
  </tbody>
  <tbody>
    <tr class="odd">
      <td class="firstcol" >&nbsp; Private</td>
      <td  >-0.3</td>
      <td  >0.8</td>
      <td  >0.9</td>
      <td  >2.7</td>
      <td  >12.5</td>
      <td  >15.4</td>
      <td  >10.9</td>
    </tr>
  </tbody>
  <tbody>
    <tr>
      <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential</td>
      <td  >-0.3</td>
      <td  >0.5</td>
      <td  >0.8</td>
      <td  >1.4</td>
      <td  >16.8</td>
      <td  >14.6</td>
      <td  >20.1</td>
    </tr>
  </tbody>
  <tbody>
    <tr class="odd">
      <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential</td>
      <td  >-0.4</td>
      <td  >1.0</td>
      <td  >0.9</td>
      <td  >4.2</td>
      <td  >8.1</td>
      <td  >16.3</td>
      <td  >2.7</td>
    </tr>
  </tbody>
  <tbody>
    <tr>
      <td class="firstcol" >&nbsp; Public</td>
      <td  >-2.0</td>
      <td  >-3.5</td>
      <td  >1.0</td>
      <td  >-8.8</td>
      <td  >4.5</td>
      <td  >1.9</td>
      <td  >-3.1</td>
   </tr>
              </tbody>
            </table>
            </span>
</body></html>


The value of construction put-in-place fell 0.7% (-0.3% y/y) during August following a 0.3% July dip, revised from little change. The value of construction spending has been moving sideways since the middle of last year, following [...]

U.S. Construction Activity Declines

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	  <br>
      
      <span id="articletext">
      <p></p>

      <p><a href="/comment/161003a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003a.png"></a>
      <a href="/comment/161003b_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003b.png"></a></p>

<p align="justify">Factory sector activity perked up last month. The ISM Composite Index of manufacturing activity
improved to 51.5 during September from an unrevised 49.4 in August. The figure compared to
50.2 expected in the Action Economics Forecast Survey. The rise left the average for the first
nine months this year at 50.9, down from 51.3 averaged in 2015. During the last ten years, there
has been a 75% correlation between the index level and the q/q change in real GDP.</p>

<p align="justify">Performance amongst the component readings was mixed. New
orders &amp; production rose moderately. The employment index rebounded but
remained below break-even, where it's been in all but one month this year. During
the last ten years, there has been an 88% correlation between the index level and the m/m
change in factory sector payrolls. The inventories reading increased and made up the prior month's
decline. The fall in the supplier deliveries index to 50.3 suggested
the quickest product delivery speeds since April.</p>

<p align="justify">The separate prices paid figure remained at 53.0, the weakest
reading since March. It was down from a high of 63.5 in May. Twenty percent (NSA) of
respondents reported paying higher prices while 14 percent paid less.</p>

<p align="justify">Amongst the other ISM series, the export index eased to 52.0
but remained up versus the February low of 46.5. The imports index recovered
part of its August decline, but remained below break-even. The order backlog index
rose to 49.5, its highest reading in three months.</p>

<p align="justify">The ISM figures are diffusion indexes where a reading above
50 indicates increase. The figures from the Institute for Supply Management can
be found in Haver's <b>USECON</b> database. The expectations number is in
Haver's <b>AS1REPNA</b> database.</p>

<p><a href="/comment/161003c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003c.png"></a>
      <a href="/comment/161003d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003d.png"></a></p>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

  <thead>
    <tr>
      <th class="firstcol" scope="col" >ISM Mfg (SA)</th>
      <th scope="col" >Sep</th>
      <th scope="col" >Aug</th>
      <th scope="col" >Jul</th>
      <th scope="col" >Sep '15</th>
      <th scope="col" >2015</th>
      <th scope="col" >2014</th>
      <th scope="col" >2013</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td class="firstcol" >Composite Index</td>
      <td  >51.5</td>
      <td  >49.4</td>
      <td  >52.6</td>
      <td  >50.0</td>
      <td  >51.3</td>
      <td  >55.6</td>
      <td  >53.8</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;New Orders</td>
      <td  >55.1</td>
      <td  >49.1</td>
      <td  >56.9</td>
      <td  >49.8</td>
      <td  >52.6</td>
      <td  >58.9</td>
      <td  >56.8</td>
    </tr>
    <tr>
      <td class="firstcol" >&nbsp;Production</td>
      <td  >52.8</td>
      <td  >49.6</td>
      <td  >55.4</td>
      <td  >51.4</td>
      <td  >53.5</td>
      <td  >59.2</td>
      <td  >57.5</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;Employment</td>
      <td  >49.7</td>
      <td  >48.3</td>
      <td  >49.4</td>
      <td  >50.2</td>
      <td  >51.0</td>
      <td  >54.4</td>
      <td  >53.1</td>
    </tr>
    <tr>
      <td class="firstcol" >&nbsp;Supplier Deliveries</td>
      <td  >50.3</td>
      <td  >50.9</td>
      <td  >51.8</td>
      <td  >49.9</td>
      <td  >50.7</td>
      <td  >55.0</td>
      <td  >51.9</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;Inventories</td>
      <td  >49.5</td>
      <td  >49.0</td>
      <td  >49.5</td>
      <td  >48.5</td>
      <td  >49.0</td>
      <td  >50.8</td>
      <td  >49.4</td>
    </tr>
    <tr>
      <td class="firstcol" >Prices Paid Index (NSA)</td>
      <td  >53.0</td>
      <td  >53.0</td>
      <td  >55.0</td>
      <td  >38.0</td>
      <td  >39.8</td>
      <td  >55.6</td>
      <td  >53.8</td>
 </tr>
              </tbody>
            </table>
            </span>
</body></html>


Factory sector activity perked up last month. The ISM Composite Index of manufacturing activity improved to 51.5 during September from an unrevised 49.4 in August. The figure compared to 50.2 expected in the Action Economics Forecast [...]

ISM Manufacturing Index Suggests Rising Activity; Prices Paid Reading Is Steady

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	  
      <br>
      
      
      <p></p>

<p align="justify"><a href="/comment/161003e_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003e.png" align="left"></a>
While the global manufacturing PMI data are still disappointing in September, they are for the most part better than they have been. The unweighted average of values in the table show the actual reading is above its six-month average for four consecutive months. From April 2014 to November 2015 ( a period of 20 months), the actual reading was consistently lower than the six-month average. This relationship only started to prevaricate as of December of last year. The current four-month stretch of improvement is the first such stretch since March 2014 which concluded a run of eight months in which the current reading stood above the six-month average.
</p><p align="justify">
Still, manufacturing PMI readings are not strong and we have yet to finalize service sector readings where there has been evidence of creeping weakness.
</p><p align="justify">
<b>The Euro Area</b><br>
In the euro area, manufacturing PMIs are relatively strong by recent relative standards with a near 80th percentile queue standing over the last five and one-half years of data. Germany's manufacturing sector with a PMI gauge at 54.3 has an 85th percentile standing over the past five and one-half years of monthly readings. France, at 49.7, has a 69th percentile standing. Italy, with diffusion reading at 51.0, has a 50th percentile standing. With these metrics, the EMU, Germany and even France stand in September above their respective manufacturing 12-month averages, but not by much.
</p><p align="justify">
<b>More Broadly</b><br>
On revised data, China posts a reading above 50 at 50.1 in September, up from 50.0 in August. Its moving average of its manufacturing PMI shows progress but very begrudging progress. Still, China has been so weak that its 50.1% manufacturing reading -which barely registers any growth at all- has a 62nd percentile standing: it has been even weaker 62% of the time over the last five and one-half years. We see contracting readings on the month from France, Brazil South Korea and Turkey. That's a relatively short list. Only Canada, India and South Korea weakened month-to-month on the manufacturing metric. The unweighted average of the readings in this table has a 57th percentile standing as they move solidly into the top one-half of all observations over the past five and one-half years. Still, the momentum is poor and very slow-moving although in the upward direction.
</p><p align="justify">
<b>Beyond Simple Economics</b><br>
The U.K. Prime Minister has just announced her intention to begin the U.K.'s formal Brexit filing in March 2017. Sterling is weaker on that reminder. PMI data dominated today's reports, but several other bits of news remind us of fragile global conditions. Deutsche Bank is still in the news and is reported to be pressing hard to conclude a deal with the U.S. Justice Department hoping to lessen the pressures it faces in markets. On an altogether different note, in Russia, Vladimir Putin has put a halt to a project to clean up and dispose of plutonium that Russia and the U.S. had previously agreed to. Old 'Cold War' concerns begin to resurface. The conflict in Syria is not going well for U.S.-Russian relations. To make matters worse, Russia is clearly feeling the economic pinch from the ongoing weakness in oil prices. It is no surprise that with those forces in train Russia seeks to move the U.S. out of its comfort zone as well. While geopolitics is not economics, we can see at time like this how they become reconnected. The Russian manufacturing PMI did take a step higher in September but still signals weak growth.
</p><p align="justify">
On balance, there is some evidence of global manufacturing PMIs rebounding. Outright contractions are less common in September and even deterioration month-to-month is less common. The pace of improvement is slow, but there is evidence of ongoing improvement. It's not a great month for economic signals, but given the way things have been, it's an improvement and a step in the right direction.
</p>

<p><img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161003.png" width="660" height="490"></p>
</html>

While the global manufacturing PMI data are still disappointing in September, they are for the most part better than they have been. The unweighted average of values in the table show the actual reading is above its six-month average [...]

Euro Area Manufacturing PMI Shows Some Lift

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

250502A5.jpg

250502B5.jpg

Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.8% in April from 7.9% in March.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

250502C5.jpg

250502D5.jpg

The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

250502X5.jpg

250502F5.jpg

- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

250502F32.jpg

250502G32.jpg

Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

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

250502H32.jpg

250502I32.jpg

- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

250502E.jpg

The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

250502.jpg

Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

250501Z4.jpg

**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

250501Z5.jpg

**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

250501Z6.jpg

Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3PzXXKrkHcwtOLipohEdnB?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

250501H20.jpg

250501I20.jpg

- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

Economy in Brief: October 2016

Jump to:

U.S. Construction Activity Declines

ISM Manufacturing Index Suggests Rising Activity; Prices Paid Reading Is Steady

Euro Area Manufacturing PMI Shows Some Lift