Sandy Batten

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

 <a href="/comment/160603i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603i.png"></a>
 <a href="/comment/160603j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603j.png"></a>

New factory orders rose 1.9%m/m in April following an upwardly revised 1.7% m/m increase in March. The Action Economics Forecast Survey had anticipated a 2.0% m/m rise for April. Durable goods orders for April (the advance report was released on May 26) were unrevised in today's report, rising 3.4% m/m on top of an upwardly revised 2.0% m/m increase in March. As in the advance report, durable goods orders in April were propelled by an 8.7% m/m surge in orders for transportation equipment, mostly nondefense aircraft (+65.3% m/m).
Besides revisions to the durable goods figures, the new information in this report was on nondurable goods. Those orders increased 0.4% m/m in April following a 1.4% m/m jump in March, their second consecutive monthly increase after eight consecutive monthly decreases.
Shipments of manufactured goods rose 0.5% m/m in April, their second consecutive monthly increase following declines in seven of the previous eight months. The rise in April was spread relatively evenly across durable and nondurable goods. Durable good shipments increased 0.5% m/m while nondurable shipments increased 0.4% m/m.
Unfilled orders jumped 0.6% m/m in April, their largest monthly increase since July 2014. Except for Machinery, all major categories experienced an increase in unfilled orders in April with Primary Metals leading the way with a 1.2% m/m rise.
Factory inventories continued to slide, posting their tenth consecutive monthly decline in April, falling 0.1% m/m. Inventories of durable goods, down 0.1% m/m, accounted for the April decline, while inventories of nondurables goods were essentially unchanged.

The factory sector figures are available in Haver's USECON database.
The expectations figure from the Action Economics Forecast Survey is available
in AS1REPNA.

<a href="/comment/160603k_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603k.png"></a>
 <a href="/comment/160603l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603l.png"></a>

<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" >Factory Sector- NAICS
 Classification (%)</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >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" >New Orders</td>
 <td >1.9</td>
 <td >1.7</td>
 <td >-1.9</td>
 <td >-2.7</td>
 <td >-6.4</td>
 <td >1.8</td>
 <td >2.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Shipments</td>
 <td >0.5</td>
 <td >0.3</td>
 <td >-0.6</td>
 <td >-4.7</td>
 <td >-4.4</td>
 <td >1.2</td>
 <td >2.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Unfilled Orders</td>
 <td >-0.6</td>
 <td >0.0</td>
 <td >-0.5</td>
 <td >-1.6</td>
 <td >-2.4</td>
 <td >8.8</td>
 <td >5.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td >-0.1</td>
 <td >-0.1</td>
 <td >-0.4</td>
 <td >-3.0</td>
 <td >-2.5</td>
 <td >1.8</td>
 <td >0.9</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

New factory orders rose 1.9%m/m in April following an upwardly revised 1.7% m/m increase in March. The Action Economics Forecast Survey had anticipated a 2.0% m/m rise for April. Durable goods orders for April (the advance report was [...]

U.S. Factory Orders Solid in April

Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

<a href="/comment/160603n_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603n.png"></a>
 <a href="/comment/160603o_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603o.png"></a>

The Composite Index of Nonmanufacturing Sector Business Activity from the
Institute for Supply Management (ISM) declined to 52.9 during May versus an
unrevised 55.7 in April. It was the lowest level since February 2014. Consensus
expectations had been for a rise to 55.3 in the Action Economics Forecast
Survey. The ISM data are diffusion indexes where readings above 50 indicates
expansion.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM
index and the ISM factory sector measure released Wednesday. It fell to 52.7, the
lowest level since August 2012. During the last ten years, there has been a 72%
correlation between the index and the q/q change in real GDP.
Amongst the component series, the business activity reading fell to 55.1, the
lowest reading since January. New orders dropped sharply to 54.2. The employment
index fell below break-even to 49.7 following two months above 50. During the
last ten years, there has been a 96% correlation between the employment index
and the m/m change in service plus construction payrolls. The supplier delivery
index increased to 52.5.
The prices paid series increased to 55.6, the highest level since September
2014. Twenty four percent (NSA) of respondents paid higher prices while 7
percent paid less.
The export order series (NSA) fell to 49.0 and the imports series eased to
53.5. The order backlog figure fell to 50.0 and remained down versus a high of
56.5 last August.
The figures are available in Haver's USECON database. The expectations
figure from Action Economics is in the AS1REPNA database.

<a href="/comment/160603p_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603p.png"></a>
 <a href="/comment/160603q_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603q.png"></a>

<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" ><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
 Nonmanufacturing Survey (SA)</a></th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >May'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 Diffusion Index</td>
 <td >52.9</td>
 <td >55.7</td>
 <td >54.5</td>
 <td >55.9</td>
 <td >57.1</td>
 <td >56.2</td>
 <td >54.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Business Activity</td>
 <td >55.1</td>
 <td >58.8</td>
 <td >59.8</td>
 <td >59.9</td>
 <td >60.8</td>
 <td >59.7</td>
 <td >56.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; New Orders</td>
 <td >54.2</td>
 <td >59.9</td>
 <td >56.7</td>
 <td >58.0</td>
 <td >59.2</td>
 <td >58.6</td>
 <td >55.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Employment</td>
 <td >49.7</td>
 <td >53.0</td>
 <td >50.3</td>
 <td >55.8</td>
 <td >56.1</td>
 <td >54.9</td>
 <td >54.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Supplier Deliveries (NSA)</td>
 <td >52.5</td>
 <td >51.0</td>
 <td >51.0</td>
 <td >50.0</td>
 <td >52.5</td>
 <td >51.8</td>
 <td >51.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Prices Index</td>
 <td >55.6</td>
 <td >53.4</td>
 <td >49.1</td>
 <td >54.0</td>
 <td >50.7</td>
 <td >56.8</td>
 <td >55.7</td>
 </tr>
 </tbody>
</table>


</body>

</html>

The Composite Index of Nonmanufacturing Sector Business Activity from the Institute for Supply Management (ISM) declined to 52.9 during May versus an unrevised 55.7 in April. It was the lowest level since February 2014. Consensus [...]

U.S. ISM Nonmanufacturing Index Declines Unexpectedly; Prices Firm

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 
 

<a href="/comment/160603m_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603m.png" align="left"></a>

Globally the service sector remains weak and it is not stepping up to provide a counterbalance to ongoing and worsening manufacturing sector weakness. Six of 15 of these bellwether markets show a weaker services reading in May. Only Turkey shows a reading below 50. However, the service sector almost always grows. More significant is the run of weak queue standings (table: second column to the right). The queue standings position this month's diffusion index in its history of values back to 2008 or so. In this run of data there are six of 15 nations reporting severely weak sectors whose service sector readings are at or below the lower 40% of all their respective "historic" readings. There are only three really strong readings from Indonesia (87th percentile), Vietnam (93rd percentile) and Mexico (89th percentile). These, of course, are smaller economies that rely on export-led growth. Germany, France and Canada have readings that lie in their 70th percentile range (top 30%). The Euro Area and South Korea lie in their top 40th percentile. There is nothing here that is impressive from a global perspective. 

Remembering that the manufacturing sectors are outright weak... there is very little here to provide a backbone of support to counterbalance weakness in manufacturing.

With that as background, the weak US employment report for May could put the global markets in a severe state of shock. The US job weakness (albeit with the unemployment rate down to 4.7% - really!) is going to have profound global impact. The Fed has been assuming that growth is in train and that hiking rates was just a matter of time...sooner or later...and probably sooner. It also has simply assumed that the labor market would tighten and wages would rise, boosting inflation. Instead, the unemployment rate has dropped sharply and job growth has ground to a halt! Who saw that coming? Inflation which was rising early in the year has hit a plateau in the US. That goes for wage pressures too. Do we now know where we are in the business cycle or are we lost? 

Other countries have been struggling to get growth over the hump to a point where it could sustain itself. But no other country has really had that success. And now the US central bank's "achievement" will be put under the microscope. Just this week OPEC met and really agreed to do nothing. But at that meeting the ministers saw the oil market rebalancing and the Qatar minister rather ominously concluded that "the worst is behind us". Well if the US economy is really downshifting he may want to rethink that comment.

We are back to a more topsy-turvy world in which there now is much less that we can take for granted and use as a base for analysis going forward. The week's data have not been kind to Europe. Just today e-Zone retail sales came up lame in April (dead-flat) one month after sales fell by 0.6%. EMU retail sales are slowing and decelerating over the last year and are contracting over the most recent three months. The global economy suddenly seems to be in a more precarious position. The OECD's call for countries to implement more stimulus seems more timely. And the break-up of the G7 meeting with no real call to action seems to be out of step with reality. On the other hand OPEC is making policy by wishing and hoping. Welcome to wonderland. 


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603.png" width="660" height="300">
</html>

Globally the service sector remains weak and it is not stepping up to provide a counterbalance to ongoing and worsening manufacturing sector weakness. Six of 15 of these bellwether markets show a weaker services reading in May. Only [...]

Global Services Show Softness

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

 <a href="/comment/160603e_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603e.png"></a>
 <a href="/comment/160603f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603f.png"></a>

The U.S. trade deficit in goods and services widened to $37.4 billion in April from a revised $35.5 billion in March. The Action Economics Forecast Survey had expected a $42.0 billion deficit billion. While this outcome would appear to be much better than expected, it was significantly impacted by benchmark revisions. Compared to the pre-revision March reading ($40.4 billion), the consensus was looking for a $1.6 billion widening of the deficit in April. In the event (that is, after revisions), the deficit widened by $1.9 billion in April. Both exports and imports rose in April, reversing their March declines. Exports were up 1.5% m/m in April after a revised 1.1% m/m drop in March. The import rebound in April was sharper with imports rising 2.1% m/m following a revised 4.6% m/m decline in March.
The highlight of the April report was the benchmark revisions that extended back to January 2013. Every monthly revision to the goods and services trade balance was positive, that is, a smaller deficit than previously reported. On average, the revision to the trade deficit was $2.2 billion; that is, the revised trade deficit on average was $2.2 billion per month smaller than previously reported. The source of the revisions was mainly exports. Again, every monthly revision to exports was positive, averaging a $2.5 billion increase per month across both goods and services. Revisions to imports were significantly smaller and were both positive and negative, averaging only $0.3 billion per month. These revisions should reduce the drag from trade that has been evident in the GDP figures.
In the details, the goods deficit increased $1.4 billion to $58.8 billion in April while the services surplus slipped $0.5 billion to $21.4 billion. Goods exports were up 2.5% m/m in April, slightly outpacing the 2.4% m/m rise in goods imports. Both goods exports and imports in April were stronger across all end-use categories except the catch-all "Other". Petroleum imports jumped 5.7% m/m in April, more than reversing their 3.9% m/m decline in March; nonpetroleum imports also rose in April (2.3% m/m) but failed to offset their 5.7% m/m drop in March. Exports of services slipped 0.4%m/m in April while imports of services edged up 0.7% m/m. The decline in services exports was widely spread while the increase in services imports was concentrated in "Transport".
By country, the trade deficit with China ($26.6 billion) was little changed in April from March, while the deficits with the European Union ($11.8 billion) and with Japan ($6.0 billion) widened slightly in April.

The international trade data can be found in Haver's USECON database.
Detailed figures are available in the USINT database. The expectations
figures are from the Action Economics Forecast Survey, which is carried in the AS1REPNA.

<a href="/comment/160603g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603g.png"></a>
 <a href="/comment/160603h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603h.png"></a>


 <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" >Foreign Trade in Goods &amp;
 Services (Current Dollars)</th>
 <th>Apr</th>
 <th>Mar</th>
 <th>Feb</th>
 <th>Y/Y</th>
 <th>2015</th>
 <th>2014</th>
 <th>2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" scope="col" >U.S. Trade Deficit</td>
 <td >$37.4 bil.</td>
 <td >$35.5 bil.</td>
 <td >$44.0 bil.</td>
 <td >$40.9 bil. 
 (4/15)</td>
 <td >$500.4 bil.</td>
 <td >$490.2 bil.</td>
 <td >$461.9 bil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Exports of Goods &amp; Services (% Chg)</td>
 <td >1.5</td>
 <td >-1.1</td>
 <td >1.3</td>
 <td >-4.6</td>
 <td >-4.9</td>
 <td >3.6</td>
 <td >3.4</td>
 </tr>
 <tr>
 <td class="firstcol" >Imports of Goods &amp; Services (% Chg)</td>
 <td >2.1</td>
 <td >-4.6</td>
 <td >1.8</td>
 <td >-5.3</td>
 <td >-3.7</td>
 <td >4.0</td>
 <td >0.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Petroleum (% Chg)</td>
 <td >5.7</td>
 <td >-3.9</td>
 <td >-10.5</td>
 <td >-34.3</td>
 <td >-45.5</td>
 <td >-9.6</td>
 <td >-11.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nonpetroleum (% Chg)</td>
 <td >2.3</td>
 <td >-5.7</td>
 <td >3.0</td>
 <td >-4.2</td>
 <td >2.2</td>
 <td >6.5</td>
 <td >2.0</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The U.S. trade deficit in goods and services widened to $37.4 billion in April from a revised $35.5 billion in March. The Action Economics Forecast Survey had expected a $42.0 billion deficit billion. While this outcome would appear [...]

April US Trade Deficit Widens with Increases in Both Exports and Imports

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 

<a href="/comment/160603a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603a.png"></a>
 <a href="/comment/160603b_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603b.png"></a>

Nonfarm payrolls grew just 38,000 (1.7% y/y) during May following downwardly revised gains of 123,000 and 186,000 during the prior two months. Revisions subtracted a combined 59,000 from April and March. It was the smallest increase since September 2010. A 154,000 increase had been expected in the Action Economics Forecast Survey. The strike by Verizon workers subtracted roughly 30,000 from last month's increase. Weaker job growth readings were widespread. The unemployment rate declined to 4.7% versus an expected 4.9%. The overall unemployment rate, including marginally attached and part-time for economic reasons, held steady at 9.7%. Average hourly earnings rose an expected 0.2% (2.5% y/y).
From the payroll survey, employment results were disappointing across sectors. Factory payrolls fell 10,000, construction employment declined 15,000 and mining payrolls fell 10,200. In the service sector, private employment rose 61,000, the weakest rise since June 2012. With Verizon workers added back in, the 91,000 worker increase still would have been the weakest since December 2013. Education & health services jobs grew 67,000 (3.1% y/y) and retail trade jobs employment gained 11,400 (2.1% y/y). Leisure & hospitality employment improved 11,000 (2.6% y/y) and financial activities jobs added 8,000 (1.9% y/y). Jobs in trade, transportation & utilities remained unchanged (1.6% y/y). Temporary help employment fell 21,000 (+0.6% y/y) and is down 2.2% since December. Government sector payrolls improved 13,000 (0.5% y/y). Federal government jobs rose 12,000 (1.0% y/y) and local government jobs grew 8,000 (0.5% y/y). State government employment fell 7,000 (+0.1% y/y).
The average workweek held steady at 34.4 hours, down from the expansion high of 34.6 in January.

<a href="/comment/160603c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603c.png"></a>
 <a href="/comment/160603d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603d.png"></a>

The 0.2% rise in average hourly earnings followed a downwardly revised 0.4% increase. Nevertheless, the y/y increase of 2.5% remained up from 1.9% during all of 2012. Earnings in the mining & logging sector improved 4.1% y/y. Goods-producing sector earnings rose 3.0% y/y and in private services, they increased 2.4% y/y. Earnings in information services strengthened 5.0% y/y and in leisure & hospitality they gained 3.5% y/y. Professional & business services earnings rose 2.3% y/y and financial industry pay gained 2.1% y/y.
From the household survey, the unemployment rate's decline reflected a 26,000 worker increase (1.5% y/y) in employment, and a 458,000 decline (+0.7% y/y) in the labor force. The labor force participation rate declined to 62.6%, it's lowest level since December, and down from the March high of 63.0%.
The average duration of unemployment fell to 26.7 weeks, the lowest level since September.
The unemployment rate for those without a high school diploma fell to 7.1%, and for those with one but no college, it was 5.1%. Persons with less than a college degree realized 3.9% unemployment. For college graduates, the unemployment rate was 2.4%.

The labor market data are contained in Haver's USECON database. Detailed
figures are in the EMPL and LABOR databases. The expectations
figure is in the AS1REPNA database.

<a href="/comment/160603r_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603r.png"></a>
 <a href="/comment/160603s_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160603s.png"></a>
 

<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" >Employment: (SA, M/M Change,
 000s)</th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >May 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" >Payroll Employment</td>
 <td >38</td>
 <td >123</td>
 <td >186</td>
 <td >1.7%</td>
 <td >2.1%</td>
 <td >1.9%</td>
 <td >1.6%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Previous</td>
 <td >--</td>
 <td >160</td>
 <td >208</td>
 <td >--</td>
 <td >--</td>
 <td >--</td>
 <td >--</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Manufacturing</td>
 <td >-10</td>
 <td >2</td>
 <td >-29</td>
 <td >-0.3</td>
 <td >1.1</td>
 <td >1.4</td>
 <td >0.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Construction</td>
 <td >-15</td>
 <td >-5</td>
 <td >37</td>
 <td >3.4</td>
 <td >4.8</td>
 <td >5.0</td>
 <td >3.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Private Service-Producing</td>
 <td >61</td>
 <td >144</td>
 <td >174</td>
 <td >2.2</td>
 <td >2.5</td>
 <td >2.1</td>
 <td >2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Government</td>
 <td >13</td>
 <td >-7</td>
 <td >19</td>
 <td >0.5</td>
 <td >0.5</td>
 <td >0.0</td>
 <td >-0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Average Weekly Hours - Private Sector</td>
 <td >34.4</td>
 <td >34.4</td>
 <td >34.4</td>
 <td >34.5 
 (May'15)</td>
 <td >34.5</td>
 <td >34.5</td>
 <td >34.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Private Sector Average Hourly Earnings
 (%)</td>
 <td >0.2</td>
 <td >0.4</td>
 <td >0.2</td>
 <td >2.5</td>
 <td >2.3</td>
 <td >2.1</td>
 <td >2.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Unemployment Rate (%)</td>
 <td >4.7</td>
 <td >5.0</td>
 <td >5.0</td>
 <td >5.5 
 (May'15)</td>
 <td >5.3</td>
 <td >6.2</td>
 <td >7.4</td>
 </tr>
 </tbody>
</table>


</html>

Nonfarm payrolls grew just 38,000 (1.7% y/y) during May following downwardly revised gains of 123,000 and 186,000 during the prior two months. Revisions subtracted a combined 59,000 from April and March. It was the smallest increase [...]

U.S. Payroll Growth Disappoints

<html>

<head>
<meta http-equiv="Content-Type" content="text/html; charset=windows-1252">
<meta name="GENERATOR" content="Microsoft FrontPage 4.0">
<meta name="ProgId" content="FrontPage.Editor.Document">
<title>U</title>
</head>



 

Nonfarm payrolls grew just 38,000 (1.7% y/y) during May

 following downwardly revised gains of 123,000 and
 186,000 during the prior two months. Revisions subtracted a combined 59,000
 from April and March. It was the smallest increase since September 2010. A
 154,000 increase had been expected in the Action Economics Forecast Survey. The
 strike by Verizon workers subtracted roughly 30,000 from last month's increase.
 Weaker job growth readings were widespread. The unemployment rate declined to
 4.7% versus an expected 4.9%. The overall unemployment rate, including
 marginally attached and part-time for economic reasons, held steady at 9.7%.
 Average hourly earnings rose an expected 0.2% (2.5% y/y).


Employment results were disappointing across sectors.
Factory payrolls fell 10,000, construction employment declined 15,000 and mining
payrolls fell 10,200. In the service sector, private employment rose 61,000, the
weakest rise since June 2012. With Verizon workers added back in, the 91,000
worker increase still would have been the weakest since December 2013.
Government sector payrolls rose 13,000.


The average workweek held steady at 34.4 hours, down from the expansion high
of 34.6 in January.
Average hourly earnings increased 0.2% following a
downwardly revised 0.4% increase. The y/y increase of 2.5% remained up from 1.9%
during all of 2012.


The unemployment rate's decline reflected a 26,000
worker increase (1.5% y/y) in employment, and a 458,000 decline (+0.7% y/y) in
the labor force. The labor force participation rate declined to 62.6%, it's
lowest level since December, and down from the March high of 63.0%.&nbsp; 
The labor market data is contained Haver's USECON database. Detailed
figures are in the EMPL and LABOR databases. The expectations
figure is in the AS1REPNA database.
<table width="1782" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="914">Employment: (SA, M/M Change,
 000s)</th>
 <th scope="col" width="123">May</th>
 <th scope="col" width="123">Apr</th>
 <th scope="col" width="123">Mar</th>
 <th scope="col" width="123">May Y/Y</th>
 <th scope="col" width="124">2015</th>
 <th scope="col" width="124">2014</th>
 <th scope="col" width="124">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="914">Payroll Employment</td>
 <td align="center" width="123">38</td>
 <td align="center" width="123">123</td>
 <td align="center" width="123">186</td>
 <td align="center" width="123">1.7%</td>
 <td align="center" width="124">2.1%</td>
 <td align="center" width="124">1.9%</td>
 <td align="center" width="124">1.6%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="914">&nbsp;Previous</td>
 <td align="center" width="123">--</td>
 <td align="center" width="123">160</td>
 <td align="center" width="123">208</td>
 <td align="center" width="123">--</td>
 <td align="center" width="124">--</td>
 <td align="center" width="124">--</td>
 <td align="center" width="124">--</td>
 </tr>
 <tr>
 <td class="firstcol" width="914">&nbsp;Manufacturing</td>
 <td align="center" width="123">-10</td>
 <td align="center" width="123">2</td>
 <td align="center" width="123">-29</td>
 <td align="center" width="123">-0.3</td>
 <td align="center" width="124">1.1</td>
 <td align="center" width="124">1.4</td>
 <td align="center" width="124">0.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="914">&nbsp;Construction</td>
 <td align="center" width="123">-15</td>
 <td align="center" width="123">-5</td>
 <td align="center" width="123">37</td>
 <td align="center" width="123">3.4</td>
 <td align="center" width="124">4.8</td>
 <td align="center" width="124">5.0</td>
 <td align="center" width="124">3.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="914">&nbsp;Private Service-Producing</td>
 <td align="center" width="123">61</td>
 <td align="center" width="123">144</td>
 <td align="center" width="123">174</td>
 <td align="center" width="123">2.2</td>
 <td align="center" width="124">2.5</td>
 <td align="center" width="124">2.1</td>
 <td align="center" width="124">2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="914">&nbsp;Government</td>
 <td align="center" width="123">13</td>
 <td align="center" width="123">-7</td>
 <td align="center" width="123">19</td>
 <td align="center" width="123">0.5</td>
 <td align="center" width="124">0.5</td>
 <td align="center" width="124">0.0</td>
 <td align="center" width="124">-0.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="914">Average Weekly Hours - Private Sector</td>
 <td align="center" width="123">34.4</td>
 <td align="center" width="123">34.4</td>
 <td align="center" width="123">34.4</td>
 <td align="center" width="123">34.5 
 (May'15)</td>
 <td align="center" width="124">34.5</td>
 <td align="center" width="124">34.5</td>
 <td align="center" width="124">34.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="914">Private Sector Average Hourly Earnings
 (%)</td>
 <td align="center" width="123">0.2</td>
 <td align="center" width="123">0.4</td>
 <td align="center" width="123">0.2</td>
 <td align="center" width="123">2.5</td>
 <td align="center" width="124">2.3</td>
 <td align="center" width="124">2.1</td>
 <td align="center" width="124">2.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="914">Unemployment Rate (%)</td>
 <td align="center" width="123">4.7</td>
 <td align="center" width="123">5.0</td>
 <td align="center" width="123">5.0</td>
 <td align="center" width="123">5.5 
 (May'15)</td>
 <td align="center" width="124">5.3</td>
 <td align="center" width="124">6.2</td>
 <td align="center" width="124">7.4</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. ISM Nomanufacturing Index Declines Unexpectedly;
Prices Firm 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;June
3, 2016
The Composite Index of Nonmanufacturing Sector Business Activity from the
Institute for Supply Management (ISM) declined to 52.9 during May versus an
unrevised 55.7 in April. It was the lowest level since February 2014. Consensus
expectations had been for a rise to 55.3 in the Action Economics Forecast
Survey. The ISM data are diffusion indexes where readings above 50 indicates
expansion.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM
index and the ISM factory sector measure released Tuesday. It fell to 52.7, the
lowest level since August 2012. During the last ten years, there has been a 72%
correlation between the index and the q/q change in real GDP.
Amongst the component series, the business activity reading fell to 55.1, the
lowest reading since January. New orders dropped sharply to 54.2. The employment
index fell below break-even to 49.7 following two months above 50. During the
last ten years, there has been a 96% correlation between the employment index
and the m/m change in service plus construction payrolls. The supplier delivery
index increased to 52.5.
The prices paid series increased to 55.6, the highest level since September
2014. Twenty four percent (NSA) of respondents paid higher prices while 7
percent paid less.
The export order series (NSA) fell to 49.0 and the imports series eased to
53.5. The order backlog figure fell to 50.0 and remained down versus a high of
56.5 last August.
The figures are available in Haver's USECON database. The expectations
figure from Action Economics is in the AS1REPNA database.
<table width="1782" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="869"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
 Nonmanufacturing Survey (SA)</a></th>
 <th scope="col" width="129">May</th>
 <th scope="col" width="130">Apr</th>
 <th scope="col" width="130">Mar</th>
 <th scope="col" width="130">May'15</th>
 <th scope="col" width="130">2015</th>
 <th scope="col" width="130">2014</th>
 <th scope="col" width="130">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="869">Composite Diffusion Index</td>
 <td align="center" width="129">52.9</td>
 <td align="center" width="130">55.7</td>
 <td align="center" width="130">54.5</td>
 <td align="center" width="130">55.9</td>
 <td align="center" width="130">57.1</td>
 <td align="center" width="130">56.2</td>
 <td align="center" width="130">54.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="869">&nbsp;&nbsp; Business Activity</td>
 <td align="center" width="129">55.1</td>
 <td align="center" width="130">58.8</td>
 <td align="center" width="130">59.8</td>
 <td align="center" width="130">59.9</td>
 <td align="center" width="130">60.8</td>
 <td align="center" width="130">59.7</td>
 <td align="center" width="130">56.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="869">&nbsp;&nbsp; New Orders</td>
 <td align="center" width="129">54.2</td>
 <td align="center" width="130">59.9</td>
 <td align="center" width="130">56.7</td>
 <td align="center" width="130">58.0</td>
 <td align="center" width="130">59.2</td>
 <td align="center" width="130">58.6</td>
 <td align="center" width="130">55.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="869">&nbsp;&nbsp; Employment</td>
 <td align="center" width="129">49.7</td>
 <td align="center" width="130">53.0</td>
 <td align="center" width="130">50.3</td>
 <td align="center" width="130">55.8</td>
 <td align="center" width="130">56.1</td>
 <td align="center" width="130">54.9</td>
 <td align="center" width="130">54.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="869">&nbsp;&nbsp; Supplier Deliveries (NSA)</td>
 <td align="center" width="129">52.5</td>
 <td align="center" width="130">51.0</td>
 <td align="center" width="130">51.0</td>
 <td align="center" width="130">50.0</td>
 <td align="center" width="130">52.5</td>
 <td align="center" width="130">51.8</td>
 <td align="center" width="130">51.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="869">Prices Index</td>
 <td align="center" width="129">55.6</td>
 <td align="center" width="130">53.4</td>
 <td align="center" width="130">49.1</td>
 <td align="center" width="130">54.0</td>
 <td align="center" width="130">50.7</td>
 <td align="center" width="130">56.8</td>
 <td align="center" width="130">55.7</td>
 </tr>
 </tbody>
</table>





</html>

Nonfarm payrolls grew just 38,000 (1.7% y/y) during May

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

 <a href="/comment/160602j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160602j.png"></a>
 <a href="/comment/160602k_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160602k.png"></a>

The outplacement firm of Challenger, Gray &amp; Christmas reported that job
cut announcements during May fell sharply to 30,157 (-26.5% y/y) following April's
increase to 64,141, revised down from 65,141. It was the lowest layoff level since
December. Layoffs declined in the aerospace/defense, automotive, chemical,
commodities, computer, consumer products, energy, entertainment/leisure,
financial, government/nonprofit, industrial goods, retail and telecommunication
industries. Layoffs increased in the apparel, construction, education,
electronics, food, health care, insurance, media, pharmaceutical, services and
transportation industries. During the last ten years, there has been a 68%
correlation between the level of job cut announcements and the m/m change in
payroll employment.

Challenger also samples firms' hiring plans. Hiring strengthened 24,732, and
nearly doubled y/y, after rising 11,557 in April. It rose in the chemical,
computer, education, food, insurance, media, retail and telecommunications
industries. Hiring fell in the aerospace/defense, automotive, construction,
consumer products, electronics, energy, entertainment/leisure, financial,
government/nonprofit, pharmaceutical industries.

The Challenger figures are available in Haver's SURVEYS database.

<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" >
 Challenger, Gray &amp; Christmas
 </th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >May 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" >
 Announced Job Cuts
 </td>
 <td >30,157</td>
 <td >64,141</td>
 <td >48,207</td>
 <td >-26.5</td>
 <td >598,510</td>
 <td >483,171</td>
 <td >509,051</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >
 Announced Hiring Plans
 </td>
 <td >24,732</td>
 <td >11,557</td>
 <td >10,997</td>
 <td >96.3</td>
 <td >690,751</td>
 <td >821,506</td>
 <td >764,206</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The outplacement firm of Challenger, Gray & Christmas reported that job cut announcements during May fell sharply to 30,157 (-26.5% y/y) following April's increase to 64,141, revised down from 65,141. It was the lowest layoff level [...]

Challenger Survey Indicates Job Market Strengthening

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 
 

<a href="/comment/160602e_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160602e.png" align="left"></a>
The PPI is still falling

The EMU-wide PPI gained in March but is falling again in April. After a 0.1% gain in March, the PPI is lower by 0.4% month-to-month in April. It is still falling year-over-year and by 4.4% (excluding construction- as always).

Sector trends are still weak

PPI month-to-month sector trends show that the PPI remains weak as the headline fell by 0.4% in April from March. For capital goods, the PPI rose in April by 0.1%. For consumer goods, it was flat. The PPI for intermediate goods fell by 0.1%. The overall sequential growth rates find the PPI lower by 4.4% over 12 months, falling at a 5.3% annual rate over six months, and falling (only) at a 4% pace over three months breaking the trend to persistently faster price declines (deceleration). By sector, the chain of persistent deceleration is broken only for capital goods and there it is broken weakly. Capital goods prices rise by 0.4% over 12 months; they rise at just a 0.1% annualized pace over six months. However, over three months, they accelerate, rising at a 0.4% pace, faster than over six months but still only at their 12-month pace of 0.4%. Consumer goods prices still are decelerating: falling at a 0.6% pace over 12 months, at a 1.2% pace over six months and at a faster 1.6% pace over three months. Similarly intermediate goods prices are decelerating with a -2.8% year-on-year drop, a -3.5% pace over six months and a -3.7% pace over three months. There is still a lot of downward price pressure in train component by component with capital goods being the main resisting sector (and the one with the most independent value added).

Price are still falling `everywhere all the time'

We can also look at trends across countries. In the table, we chronicle the results for the first 12-EMU members plus the U.K.: We calculate sequential growth rates over three-month six-month and 12-month. For the 36 calculations for EMU members over these horizons, all 36 show declines in prices- a rather grim and clearly uniform result. The U.K. (with its own exchange rate) shows PPI prices contrarily up at a 2.6% pace over three months.

Still...Cross-country trends show less weakness in train

On the issue of deceleration, we see a marked departure from the sector results we chronicle above. Here we see that for all EMU members, while prices fall year-over-year, when we compare that price fall to each nation's six-month trend, we find that prices fall faster over six months-or at the same pace- for all EMU members except Finland. Non-member the U.K. is also an exception. But over three months, we find the biggest difference. Here we see deceleration is in train compared to six-month for only three members with nine members showing PPIs accelerating. In this instance, that means PPIs are falling more slowly over three months than over six months for 9 of 12 members. However, inflation is still decelerating in Italy, Ireland and Finland.

Monthly patterns show a shift

As to monthly patterns, prices rose in seven of 12-member countries in March. But they only rose month-to-month in April in two members: Austria and Ireland. Prices rose back-to-back in March and April only in Austria and in nonmember U.K., but prices did rise in Finland in March and were flat month-to-month in April. The monthly evidence over the past two months lays the foundation for price drops to diminish in magnitude.

Underlying trends are changing despite headlines

This extreme parsing of the data by sector and by country is meant to identify what trends are and where they are headed. Prices largely are still falling. But the speed of their descent is braking. The deflationary trend is being broken by first reducing price acceleration in the downward direction. It will take some time to actually push prices up year-on-year. The overall 4.4% price drop will take time to unwind. At the country level, the Netherlands have the fastest 12-month drop at -10.4% over 12 months and Germany has the smallest at -2.9% over 12 months.

Complicated trends in prospect

Globally trends are changing slowly, but in the EMU the acceleration of deflation is now being set aside. The fact of deflation is still present. But with oil prices having risen, there is the blunting of one force that has been driving deflation trends. The more recent run-up in oil prices can't help but flow through to provide some upward impetus to overall price trends. Still, OPEC is meeting and there is still an oil glut. I am still not willing to call oil prices at $50/barrel `stable.' OPEC still has challenges. If prices do stay at this level, more U.S. energy output will come on stream. Meanwhile, global growth is still at a relative crawl; thus, demand is not picking up very fast. If some of the special factors that have hit oil production reverse, we could easily find the glut is back and hammering prices lower again (these special factors are a strike in France, wildfires in Canada and instability in Nigeria). Iran is still planning to ramp up output and is not giving any ground going into the OPEC meeting- nor do we expect it to do so.

ECB met and kept more or less on track

The ECB held its policy steady at today's meeting. Mario Draghi warned about stabilizing inflation at too low a level. Of course, the ECB has its eye on the HICP price index not on the PPI, but the problems to which Draghi refers are clear-at least to all but the Germans who are quite content with too-low inflation. Imagine the story of Goldilocks and the three bears in which the three bears each taste a single bowl of porridge and one finds it too cold, one finds it too hot and one finds it just right. That just about sums up how the various EMU national banks see EMU-wide inflation. Each has different views on what's right or acceptable. It is not about the `fact' as much as the perception. Of course, the ECB also has a stet inflation objective, but that too is read differently by different members.

ECB `willing to do more' but wants `patience'

Draghi also announced that the ECB was willing to take further action if inflation did not pick up- but modified that by saying there was a need for patience to see if past efforts would bear fruit. Despite oil prices rising from their lows, the ECB's economists did not shift their outlook for inflation much for 2016 and left their 2017 and 2018 views unchanged. That means that the ECB, on those projections, is still not meeting its promises on inflation and there will be more work to do but apparently no more for now.

Growth outlook is better but tempered

As to growth, Draghi warned that growth would slow from its first quarter pace and that weaker demand from developing countries for EMU exports would continue to be a restraining consideration. ECB economists did hike the growth outlook for 2016 to 1.6% from 1.4% and held their 2017 view at 1.7%. The OECD had raised its outlook in its release of yesterday because of better-than-expected Q1 growth. The OECD and the ECB economists now have the same view of growth in 2016. In his comments Draghi suggested that the X-factor to speed growth would be the faster implementation of economic reforms ignoring the OECD's plea for more fiscal stimulus made just yesterday. Draghi also noted the risk of the outlook to the ultimate Brexit decision.

Today's ECB action

The central bank's main interest rate, which it charges on ordinary loans, remains at a record low of 0%. The deposit rate stays at -0.4%, so that commercial banks continue to pay to place funds with the central bank overnight. The ECB said that it would start its corporate bond purchase program on June 8 and would conduct its first operation in its new series of targeted loans on June 22. Patience.

Other factors: the policy Twilight Zone

Draghi sort of minces words by saying that he is willing to go further then muddying that message by asking for patience. Also the fact that the ECB has an underlying forecast that shows that it is falling short of its policy goal for inflation leaves us somewhat confused as to its intent and overall message. At the BOJ, policymaker Takehiro Sato said today that he thinks that negative interest rates have the effect of monetary tightening. Japanese data show a surge in monetary base and that bank notes in circulation are up by 6.5%. Many Japanese have responded to the negative interest rate environment by hoarding cash; there is a shortage of safes as demand for home security has risen there. When policymakers cannot agree on whether their policy is a positive or negative, monetary policy has really stepped into the Twilight Zone. We see that in play in Japan as well as in the EMU as the Germans stridently disagree with the ECB's recent policy efforts.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160602.png" width="660" height="370">
</html>

The PPI is still falling The EMU-wide PPI gained in March but is falling again in April. After a 0.1% gain in March, the PPI is lower by 0.4% month-to-month in April. It is still falling year-over-year and by 4.4% (excluding [...]

Euro Area PPI Is Falling Again But Not Decelerating As ECB Is Willing But Still Waiting

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: June 2016

Jump to:

U.S. Factory Orders Solid in April

U.S. ISM Nonmanufacturing Index Declines Unexpectedly; Prices Firm

Global Services Show Softness

April US Trade Deficit Widens with Increases in Both Exports and Imports

U.S. Payroll Growth Disappoints

U.S. Payroll Growth Disappoints

Challenger Survey Indicates Job Market Strengthening

Euro Area PPI Is Falling Again But Not Decelerating As ECB Is Willing But Still Waiting