Tom Moeller

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      <p>The labor market is on a firmer footing. Nonfarm payrolls increased 288,000
      during June following upwardly-revised gains of 224,000 and 304,000 during
      the prior two months. The increase easily outpaced expectations for a
      215,000 rise in the Action Economics Forecast Survey. The unemployment
      rate moved lower to 6.1% versus an expected 6.3%. The overall unemployment
      rate, including marginally attached workers and those employed part-time
      for economic reasons, slipped to 12.1%.</p>
      
      <p>The figures referenced above are available in Haver's <b>USECON</b>
      database. Additional detail can be found in the <b>LABOR</b> and in the <b>EMPL</b>
      databases. The expectation figures are from Action Economics and are in
      the <b>AS1REPNA</b> database.</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" ><b>Employment: (M/M
              Chg., 000s)</b></th>
            <th scope="col" ><b>Jun</b></th>
            <th scope="col" ><b>May</b></th>
            <th scope="col" ><b>Apr</b></th>
            <th scope="col" ><b>Y/Y</b></th>
            <th scope="col" ><b>2013</b></th>
            <th scope="col" ><b>2012</b></th>
            <th scope="col" ><b>2011</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Payroll Employment</td>
            <td  >288</td>
            <td  >224</td>
            <td  >304</td>
            <td  >1.8%</td>
            <td  >1.7%</td>
            <td  >1.7%</td>
            <td  >1.2%</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Previous</td>
            <td  >--</td>
            <td  >217</td>
            <td  >282</td>
            <td  >--</td>
            <td  >--</td>
            <td  >--</td>
            <td  >--</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Manufacturing</td>
            <td  >16</td>
            <td  >11</td>
            <td  >9</td>
            <td  >1.1</td>
            <td  >0.7</td>
            <td  >1.7</td>
            <td  >1.7</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Construction</td>
            <td  >6</td>
            <td  >9</td>
            <td  >36</td>
            <td  >3.2</td>
            <td  >3.3</td>
            <td  >2.1</td>
            <td  >0.2</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Private Service Producing</td>
            <td  >236</td>
            <td  >202</td>
            <td  >228</td>
            <td  >2.2</td>
            <td  >2.2</td>
            <td  >2.2</td>
            <td  >1.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Government</td>
            <td  >26</td>
            <td  >0</td>
            <td  >26</td>
            <td  >0.3</td>
            <td  >-0.3</td>
            <td  >-0.8</td>
            <td  >-1.8</td>
          </tr>
          <tr>
            <td class="firstcol" >Average Weekly Hours - Private
              Sector</td>
            <td  >34.5</td>
            <td  >34.5</td>
            <td  >34.5</td>
            <td  >34.5<br>
              (Jun'13)</td>
            <td  >34.5</td>
            <td  >34.4</td>
            <td  >34.3</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Average Private Sector Hourly
              Earnings (%)</td>
            <td  >0.2</td>
            <td  >0.2</td>
            <td  >0.0</td>
            <td  >2.0</td>
            <td  >2.1</td>
            <td  >1.9</td>
            <td  >2.0</td>
          </tr>
          <tr>
            <td class="firstcol" >Unemployment Rate (%)</td>
            <td  >6.1</td>
            <td  >6.3</td>
            <td  >6.3</td>
            <td  >7.5<br>
              (Jun'13)</td>
            <td  >7.4</td>
            <td  >8.1</td>
            <td  >8.9</td>
            </tr>
              </tbody>
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The labor market is on a firmer footing. Nonfarm payrolls increased 288,000 during June following upwardly-revised gains of 224,000 and 304,000 during the prior two months. The increase easily outpaced expectations for a 215,000 rise [...]

U.S. Payroll Employment Growth Improves; Jobless Rate Falls Further

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      <p>New orders to all manufacturers declined 0.5% (+2.4% y/y) in May
      following a 0.8% increase during April, revised from 0.7%. A 0.3% decline was
      expected in the Action Economics Forecast Survey. A 0.9% decline (+2.9% y/y) in durable goods
      orders led the total lower. Factory sector orders
      excluding transportation equipment dipped 0.1% (+3.0% y/y) after three
      months of firm increase. Orders for nondurable goods (which equal shipments)
      fell 0.2% (+2.0% y/y) and these orders have been moving sideways all year.
      Shipments from chemical plants were off 1.0% (-2.9% y/y) while textile
      mill shipments declined 0.6% (+2.2% y/y). Shipments of plastics &amp;
      rubber rebounded 0.6% (3.4% y/y).</p>
      
      <p>Inventories in the factory sector firmed 0.8% (3.8% y/y), the strongest
      gain since October 2011. In the durable goods sector,
      inventories rose 0.9% (5.4% y/y) led by a 2.2% rise (4.8% y/y) in
      computers &amp; electronic products. Amongst nondurable goods industries, inventories
      increased 0.6% (1.4% y/y). The gain was paced by a 2.1% jump (24.2% y/y) in
      apparel, a 1.5% improvement (6.6% y/y) in printing and a 1.5% increase
      (4.4% y/y) in petroleum inventories.</p>
      
      <p>Unfilled orders increased 0.6% (7.9% y/y), strong for the third consecutive month. Excluding the transportation sector,
      order backlogs rose 0.5% (5.8% y/y). Backlogs of electrical equipment
      gained 1.1% (10.3% y/y) and unfilled
      orders of transportation equipment improved 0.7% (9.2% y/y). Unfilled
      orders of furniture rose 0.6% (4.5% y/y) while backlogs in the machinery sector
      also rose 0.6% (11.3% y/y).</p>
      
      <p>The factory sector figures are available in Haver's <b>USECON </b>database.</p>
      
      <p><a href="/comment/140702l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140702l.png"></a>
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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

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            <th class="firstcol" scope="col" >Factory Sector- NAICS
              Classification</th>
            <th scope="col" ><b>May</b></th>
            <th scope="col" ><b>Apr</b></th>
            <th scope="col" ><b>Mar</b></th>
            <th scope="col" ><b>Y/Y</b></th>
            <th scope="col" ><b>2013</b></th>
            <th scope="col" ><b>2012</b></th>
            <th scope="col" ><b>2011</b></th>
          </tr>
        </thead>
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            <td class="firstcol" >New Orders</td>
            <td  >-0.5</td>
            <td  >0.8</td>
            <td  >1.5</td>
            <td  >2.4</td>
            <td  >2.7</td>
            <td  >2.9</td>
            <td  >12.9</td>
          </tr>
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            <td class="firstcol" >Shipments</td>
            <td  >0.1</td>
            <td  >0.4</td>
            <td  >0.4</td>
            <td  >2.9</td>
            <td  >2.1</td>
            <td  >4.0</td>
            <td  >12.1</td>
          </tr>
          <tr>
            <td class="firstcol" >Inventories</td>
            <td  >0.8</td>
            <td  >0.5</td>
            <td  >0.2</td>
            <td  >3.8</td>
            <td  >2.3</td>
            <td  >2.4</td>
            <td  >10.2</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Unfilled Orders</td>
            <td  >0.6</td>
            <td  >0.9</td>
            <td  >0.8</td>
            <td  >7.9</td>
            <td  >7.0</td>
            <td  >3.7</td>
            <td  >10.0</td>
</tr>
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New orders to all manufacturers declined 0.5% (+2.4% y/y) in May following a 0.8% increase during April, revised from 0.7%. A 0.3% decline was expected in the Action Economics Forecast Survey. A 0.9% decline (+2.9% y/y) in durable [...]

U.S. Factory Sector Orders Pull Back but Inventories Continue to Increase

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            <p>The Mortgage Bankers Association reported that their total
            Mortgage Market Volume Index edged 0.2% lower last week (-37.5% y/y)
            and added to declines during the prior two weeks. Applications
            remained two-thirds below the peak in September 2012. Home <i>purchase</i>
            applications fell 0.7% (-15.9% y/y) while applications to <i>refinance</i>
            an existing loan were stable (-48.5% y/y).</p>
            
            <p>The effective interest rate on a 15-year mortgage declined last
            week to 3.46%, the lowest level since late-May. The effective rate
            on a 30-year fixed rate loan fell to 4.32%. The rate on a Jumbo
            30-year loan slipped to 4.28%. For adjustable 5-year mortgages, the
            effective interest rate held steady at 3.33%, its highest level
            since early-May.</p>
            
            <p>The average mortgage loan size rose to $246,600. The average loan
            size for home purchases held fairly steady at $276,200 but for
            refinancings it rose to $219,800.</p>
            
            <p>Applications for fixed interest rate loans declined 37.6% y/y
            while adjustable rate loan applications were off by 36.3% y/y.</p>
            
            <p>The survey covers over 75 percent of all U.S. retail residential
            mortgage applications, and has been conducted weekly since 1990.
            Respondents include mortgage bankers, commercial banks and thrifts.
            The base period and value for all indexes is March 16, 1990=100. The
            figures for weekly mortgage applications and interest rates are
            available in Haver's <b>SURVEYW</b> database.</p>
            
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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

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                  <th class="firstcol" scope="col" 0918 0925 >MBA
                    Mortgage Applications (SA, 3/16/90=100)</th>
                  <th scope="col" 0918 0925 >06/27/14</th>
                  <th scope="col" 0918 0925 >06/20/14</th>
                  <th scope="col" 0918 0925 >06/13/14</th>
                  <th scope="col" 0918 0925 >Y/Y%</th>
                  <th scope="col" 0918 0925 >2013</th>
                  <th scope="col" 0918 0925 >2012</th>
                  <th scope="col" 0918 0925 >2011</th>
                </tr>
              </thead>
              <tbody>
                <tr class="odd">
                  <td class="firstcol" 0918 0925 >Total Market Index</td>
                  <td 0918 0925  >347.3</td>
                  <td 0918 0925  >348.1</td>
                  <td 0918 0925  >351.6</td>
                  <td 0918 0925  >-37.5</td>
                  <td 0918 0925  >616.6</td>
                  <td 0918 0925  >813.8</td>
                  <td 0918 0925  >572.3</td>
                </tr>
                <tr>
                  <td class="firstcol" 0918 0925 >&nbsp;Purchase</td>
                  <td 0918 0925  >175.2</td>
                  <td 0918 0925  >176.4</td>
                  <td 0918 0925  >178.6</td>
                  <td 0918 0925  >-15.9</td>
                  <td 0918 0925  >197.5</td>
                  <td 0918 0925  >187.8</td>
                  <td 0918 0925  >182.6</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" 0918 0925 >&nbsp;Refinancing</td>
                  <td 0918 0925  >1,323.9</td>
                  <td 0918 0925  >1,322.6</td>
                  <td 0918 0925  >1,334.0</td>
                  <td 0918 0925  >-48.5</td>
                  <td 0918 0925  >3,070.0</td>
                  <td 0918 0925  >4,505.0</td>
                  <td 0918 0925  >2,858.4</td>
                </tr>
                <tr>
                  <td class="firstcol" 0918 0925 >15-Year Mortgage
                    Effective Interest Rate (%)</td>
                  <td 0918 0925  >3.46</td>
                  <td 0918 0925  >3.52</td>
                  <td 0918 0925  >3.54</td>
                  <td 0918 0925  >3.56<br>
                    (6/13)</td>
                  <td 0918 0925  >3.42</td>
                  <td 0918 0925  >3.25</td>
                  <td 0918 0925  >3.97</td>
                </tr>
              </tbody>
            </table>
            </span>
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The Mortgage Bankers Association reported that their total Mortgage Market Volume Index edged 0.2% lower last week (-37.5% y/y) and added to declines during the prior two weeks. Applications remained two-thirds below the peak in [...]

U.S. Mortgage Loan Applications and Interest Rates Move Lower

Robert Brusca

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PPI trends in the EMU continue to push lower. The chart shows that only intermediate goods inflation trend has a small upturn in recent months. 
</p><p>
In May the PPI (excluding construction) rose by 0.1% after a 0.2% April increase. Still, the three-month growth rate is negative at -0.4% (SAAR). Inside of one year the PPI shows inflation rather steady in a narrow range, hovering around -0.5%. But year-over-year trends still are heading lower.
</p><p>
Various EMU countries still show a good deal of PPI weakness. In May, four of eleven countries show PPI prices falling. In April, three of eleven show prices falling. Over three months, eight of eleven show dropping producer prices. Ten of eleven show dropping prices over six months. Over one year, eight of eleven show dropping prices.
</p><p>
These trends are broad although the price drop tendencies are lessening in the past two months. That is too short a time to make a dependable trend. And measures of activity in the EMU have weakened, giving us less reason to think that the environment should firm prices.
</p><p>
For now the European Central Bank's fight to stimulate credit expansion and growth in the EMU seems to be as necessary as ever. Consumer goods prices are still dropping sharply over all horizons, but capital goods prices are showing steady if moderate expansion. The consumer sector still appears to be the weak spot in Europe. Some consumer confidence measures have begun to stir.  Unemployment has been steady at still elevated levels for the past two months. Unemployment will need to fall if solid improvements in consumer confidence are to be made. 
</p>

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PPI trends in the EMU continue to push lower. The chart shows that only intermediate goods inflation trend has a small upturn in recent months. In May the PPI (excluding construction) rose by 0.1% after a 0.2% April increase. Still, [...]

EMU PPI Is Still Weak

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<title>Chicago Fed National Activity Index Suggests Slower Economic Growth by
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      <p>Employment growth picked up steam last month. The<b> ADP/Moody's
      National Employment Report indicated a 281,000</b> rise (2.1% y/y) in June
      nonfarm private sector jobs. It was the firmest rise since November 2012
      and followed unrevised increases of 179,000 and 215,000 in May and April.
      During the last three months, job increases averaged 222,000, below the
      peak of 259,000 in February of 2012. The June job gain beat the 205,000
      rise expected in the Action Economics Forecast Survey. During the last
      twenty years there has been a 95% correlation between the monthly ADP job
      gain and the rise in private sector nonfarm payrolls.</p>
      <p>The ADP survey is based on ADP's business payroll transaction system
      covering 406,000 companies and roughly 23 million employees. The data are
      processed by Moody's Analytics Inc., then calibrated and aligned with the
      BLS data. Extensive information on the methodology is available <a href="http://www.adpemploymentreport.com/common/docs/ADP-NER-Methodology-Exec-Summary.pdf">here</a>.</p>
      <p>Service-producing payrolls led the job gains with a 230,000 increase
      (2.1% y/y). Jobs in professional and business services increased 77,000
      (3.3% y/y); transportation and utilities employment grew 50,000 (2.0% y/y)
      while financial activities headcount gained 11,000 (0.5% y/y).
      Goods-producing payrolls rose 16,000 (2.0% y/y). Factory sector payrolls
      gained 12,000 (0.8% y/y), the strongest rise since December. Construction
      payrolls jumped 36,000 (4.0% y/y), the firmest rise of the expansion.</p>
      <p>Hiring amongst small businesses totaled 117,000 (2.1% y/y).
      Medium-sized firms' payrolls advanced 115,000 (1.8% y/y) while jobs at
      large-size companies rose 49,000 (2.6% y/y).</p>
      <p>The ADP National Employment Report data are maintained in Haver's <b>USECON</b>
      database; historical figures date back to March 2001. The figures in this
      report cover jobs only in the private sector. The expectation figure is
      available in Haver's <b>AS1REPNA</b> database.</p>
      <p><b>Monetary Policy and Financial Stability</b> is today's speech by Fed
      Chair Janet L. Yellen and it is available here <a href="http://www.federalreserve.gov/newsevents/speech/yellen20140702a.htm">http://www.federalreserve.gov/newsevents/speech/yellen20140702a.htm</a></p>
      <table class="centered" border="0" cellSpacing="0" width="1871">
        <thead>
          <tr>
            <th class="firstcol" scope="col" width="1109">ADP/Moody's National
              Employment Report</th>
            <th scope="col" width="108">Jun</th>
            <th scope="col" width="108">May</th>
            <th scope="col" width="108">Apr</th>
            <th scope="col" width="108">Y/Y</th>
            <th scope="col" width="108">2013</th>
            <th scope="col" width="109">2012</th>
            <th scope="col" width="109">2011</th>
          </tr>
        </thead>
        <tbody>
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            <td class="firstcol" width="1109">Nonfarm Private Payroll Employment
              (m/m chg, 000s)</td>
            <td align="center" width="108">281</td>
            <td align="center" width="108">179</td>
            <td align="center" width="108">215</td>
            <td align="center" width="108">2.1%</td>
            <td align="center" width="108">2.0%</td>
            <td align="center" width="109">2.3%</td>
            <td align="center" width="109">1.8%</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="1109">&nbsp;Small Payroll (1-49)</td>
            <td align="center" width="108">117</td>
            <td align="center" width="108">82</td>
            <td align="center" width="108">76</td>
            <td align="center" width="108">2.1</td>
            <td align="center" width="108">2.1</td>
            <td align="center" width="109">2.5</td>
            <td align="center" width="109">1.1</td>
          </tr>
          <tr>
            <td class="firstcol" width="1109">&nbsp;Medium Payroll (50-499)</td>
            <td align="center" width="108">115</td>
            <td align="center" width="108">62</td>
            <td align="center" width="108">82</td>
            <td align="center" width="108">1.8</td>
            <td align="center" width="108">1.6</td>
            <td align="center" width="109">2.0</td>
            <td align="center" width="109">2.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="1109">&nbsp;Large Payroll (&gt;500)</td>
            <td align="center" width="108">49</td>
            <td align="center" width="108">37</td>
            <td align="center" width="108">56</td>
            <td align="center" width="108">2.6</td>
            <td align="center" width="108">2.3</td>
            <td align="center" width="109">2.4</td>
            <td align="center" width="109">2.7</td>
          </tr>
          <tr>
            <td class="firstcol" width="1109">Goods-Producing</td>
            <td align="center" width="108">51</td>
            <td align="center" width="108">31</td>
            <td align="center" width="108">24</td>
            <td align="center" width="108">2.0</td>
            <td align="center" width="108">1.6</td>
            <td align="center" width="109">2.2</td>
            <td align="center" width="109">1.7</td>
          </tr>
          <tr>
            <td class="firstcol" width="1109">&nbsp;Manufacturing</td>
            <td align="center" width="108">12</td>
            <td align="center" width="108">11</td>
            <td align="center" width="108">4</td>
            <td align="center" width="108">0.8</td>
            <td align="center" width="108">0.6</td>
            <td align="center" width="109">1.6</td>
            <td align="center" width="109">1.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="1109">Service-Producing</td>
            <td align="center" width="108">230</td>
            <td align="center" width="108">148</td>
            <td align="center" width="108">181</td>
            <td align="center" width="108">2.1</td>
            <td align="center" width="108">2.0</td>
            <td align="center" width="109">2.3</td>
            <td align="center" width="109">1.8</td>
          </tr>
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            <span id="articletitle">U.S. Mortgage Loan Applications and Interest
            Rates Move Lower</span><br>
            <span id="byline">by <a href="http://www.haver.com/comment/Moeller.html">Tom
            Moeller</a>&nbsp;&nbsp;July 2, 2014</span><span id="articletext">
            <p>The Mortgage Bankers Association reported that their total
            Mortgage Market Volume Index edged 0.2% lower last week (-37.5% y/y)
            and added to declines during the prior two weeks. Applications
            remained two-thirds below the peak in September 2012. Home <i>purchase</i>
            applications fell 0.7% (-15.9% y/y) while applications to <i>refinance</i>
            an existing loan were stable (-48.5% y/y).</p>
            <p>The effective interest rate on a 15-year mortgage declined last
            week to 3.46%, the lowest level since late-May. The effective rate
            on a 30-year fixed rate loan fell to 4.32%. The rate on a Jumbo
            30-year loan slipped to 4.28%. For adjustable 5-year mortgages, the
            effective interest rate held steady at 3.33%, its highest level
            since early-May.</p>
            <p>The average mortgage loan size rose to $246,600. The average loan
            size for home purchases held fairly steady at $276,200 but for
            refinancings it rose to $219,800.</p>
            <p>Applications for fixed interest rate loans declined 37.6% y/y
            while adjustable rate loan applications were off by 36.3% y/y.</p>
            <p>The survey covers over 75 percent of all U.S. retail residential
            mortgage applications, and has been conducted weekly since 1990.
            Respondents include mortgage bankers, commercial banks and thrifts.
            The base period and value for all indexes is March 16, 1990=100. The
            figures for weekly mortgage applications and interest rates are
            available in Haver's <b>SURVEYW</b> database.</p>
            <table class="centered" border="0" cellSpacing="0" width="1871">
              <thead>
                <tr>
                  <th class="firstcol" scope="col" 0918 0925 width="855">MBA
                    Mortgage Applications (SA, 3/16/90=100)</th>
                  <th scope="col" 0918 0925 width="144">06/27/14</th>
                  <th scope="col" 0918 0925 width="144">06/20/14</th>
                  <th scope="col" 0918 0925 width="144">06/13/14</th>
                  <th scope="col" 0918 0925 width="145">Y/Y%</th>
                  <th scope="col" 0918 0925 width="145">2013</th>
                  <th scope="col" 0918 0925 width="145">2012</th>
                  <th scope="col" 0918 0925 width="145">2011</th>
                </tr>
              </thead>
              <tbody>
                <tr class="odd">
                  <td class="firstcol" 0918 0925 width="855">Total Market Index</td>
                  <td 0918 0925 align="center" width="144">347.3</td>
                  <td 0918 0925 align="center" width="144">348.1</td>
                  <td 0918 0925 align="center" width="144">351.6</td>
                  <td 0918 0925 align="center" width="145">-37.5</td>
                  <td 0918 0925 align="center" width="145">616.6</td>
                  <td 0918 0925 align="center" width="145">813.8</td>
                  <td 0918 0925 align="center" width="145">572.3</td>
                </tr>
                <tr>
                  <td class="firstcol" 0918 0925 width="855">&nbsp;Purchase</td>
                  <td 0918 0925 align="center" width="144">175.2</td>
                  <td 0918 0925 align="center" width="144">176.4</td>
                  <td 0918 0925 align="center" width="144">178.6</td>
                  <td 0918 0925 align="center" width="145">-15.9</td>
                  <td 0918 0925 align="center" width="145">197.5</td>
                  <td 0918 0925 align="center" width="145">187.8</td>
                  <td 0918 0925 align="center" width="145">182.6</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" 0918 0925 width="855">&nbsp;Refinancing</td>
                  <td 0918 0925 align="center" width="144">1,323.9</td>
                  <td 0918 0925 align="center" width="144">1,322.6</td>
                  <td 0918 0925 align="center" width="144">1,334.0</td>
                  <td 0918 0925 align="center" width="145">-48.5</td>
                  <td 0918 0925 align="center" width="145">3,070.0</td>
                  <td 0918 0925 align="center" width="145">4,505.0</td>
                  <td 0918 0925 align="center" width="145">2,858.4</td>
                </tr>
                <tr>
                  <td class="firstcol" 0918 0925 width="855">15-Year Mortgage
                    Effective Interest Rate (%)</td>
                  <td 0918 0925 align="center" width="144">3.46</td>
                  <td 0918 0925 align="center" width="144">3.52</td>
                  <td 0918 0925 align="center" width="144">3.54</td>
                  <td 0918 0925 align="center" width="145">3.56<br>
                    (6/13)</td>
                  <td 0918 0925 align="center" width="145">3.42</td>
                  <td 0918 0925 align="center" width="145">3.25</td>
                  <td 0918 0925 align="center" width="145">3.97</td>
                </tr>
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      <span id="articletitle">U.S. Factory Sector Orders Pull Back but Inventories
      Continue to Increase</span><br>
      <span id="byline">by <a href="http://www.haver.com/comment/Moeller.html">Tom
      Moeller</a>&nbsp;&nbsp;July 2, 2014</span><span id="articletext">
      <p>New orders to all manufacturers declined 0.5% (+2.4% y/y) in May
      following a 0.8% increase during April, revised from 0.7%. A 0.3% decline was
      expected in the Action Economics Forecast Survey. A 0.9% decline (+2.9% y/y) in durable goods
      orders led the total lower. Factory sector orders
      excluding transportation equipment dipped 0.1% (+3.0% y/y) after three
      months of firm increase. Orders for nondurable goods (which equal shipments)
      fell 0.2% (+2.0% y/y) and these orders have been moving sideways all year.
      Shipments from chemical plants were off 1.0% (-2.9% y/y) while textile
      mill shipments declined 0.6% (+2.2% y/y). Shipments of plastics &amp;
      rubber rebounded 0.6% (3.4% y/y).</p>
      <p>Inventories in the factory sector firmed 0.8% (3.8% y/y), the strongest
      gain since October 2011. In the durable goods sector,
      inventories rose 0.9% (5.4% y/y) led by a 2.2% rise (4.8% y/y) in
      computers &amp; electronic products. Amongst nondurable goods industries, inventories
      increased 0.6% (1.4% y/y). The gain was paced by a 2.1% jump (24.2% y/y) in
      apparel, a 1.5% improvement (6.6% y/y) in printing and a 1.5% increase
      (4.4% y/y) in petroleum inventories.&nbsp;</p>
      <p>Unfilled orders increased 0.6% (7.9% y/y), strong for the third consecutive month. Excluding the transportation sector,
      order backlogs rose 0.5% (5.8% y/y). Backlogs of electrical equipment
      gained 1.1% (10.3% y/y) and unfilled
      orders of transportation equipment improved 0.7% (9.2% y/y). Unfilled
      orders of furniture rose 0.6% (4.5% y/y) while backlogs in the machinery sector
      also rose 0.6% (11.3% y/y).</p>
      <p>The factory sector figures are available in Haver's <b>USECON </b>database.</p>
      <table class="centered" border="0" cellSpacing="0" width="1871">
        <thead>
          <tr>
            <th class="firstcol" scope="col" width="983">Factory Sector- NAICS
              Classification</th>
            <th scope="col" width="126"><b>May</b></th>
            <th scope="col" width="126"><b>Apr</b></th>
            <th scope="col" width="126"><b>Mar</b></th>
            <th scope="col" width="126"><b>Y/Y</b></th>
            <th scope="col" width="126"><b>2013</b></th>
            <th scope="col" width="127"><b>2012</b></th>
            <th scope="col" width="127"><b>2011</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" width="983">New Orders</td>
            <td align="center" width="126">-0.5</td>
            <td align="center" width="126">0.8</td>
            <td align="center" width="126">1.5</td>
            <td align="center" width="126">2.4</td>
            <td align="center" width="126">2.7</td>
            <td align="center" width="127">2.9</td>
            <td align="center" width="127">12.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="983">Shipments</td>
            <td align="center" width="126">0.1</td>
            <td align="center" width="126">0.4</td>
            <td align="center" width="126">0.4</td>
            <td align="center" width="126">2.9</td>
            <td align="center" width="126">2.1</td>
            <td align="center" width="127">4.0</td>
            <td align="center" width="127">12.1</td>
          </tr>
          <tr>
            <td class="firstcol" width="983">Inventories</td>
            <td align="center" width="126">0.8</td>
            <td align="center" width="126">0.5</td>
            <td align="center" width="126">0.2</td>
            <td align="center" width="126">3.8</td>
            <td align="center" width="126">2.3</td>
            <td align="center" width="127">2.4</td>
            <td align="center" width="127">10.2</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="983">Unfilled Orders</td>
            <td align="center" width="126">0.6</td>
            <td align="center" width="126">0.9</td>
            <td align="center" width="126">0.8</td>
            <td align="center" width="126">7.9</td>
            <td align="center" width="126">7.0</td>
            <td align="center" width="127">3.7</td>
            <td align="center" width="127">10.0</td>
          </tr>
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Employment growth picked up steam last month. The ADP/Moody's National Employment Report indicated a 281,000 rise (2.1% y/y) in June nonfarm private sector jobs. It was the firmest rise since November 2012 and followed unrevised [...]

U.S. ADP Employment Gain is Strongest Since 2012

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      <p></p>
      
      <p><a href="/comment/140702a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140702a.png"></a>
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      <p>Employment growth picked up steam last month. The<b> ADP/Moody's
      National Employment Report indicated a 281,000</b> rise (2.1% y/y) in June
      nonfarm private sector jobs. It was the firmest rise since November 2012
      and followed unrevised increases of 179,000 and 215,000 in May and April.
      During the last three months, job increases averaged 222,000, below the
      peak of 259,000 in February of 2012. The June job gain beat the 205,000
      rise expected in the Action Economics Forecast Survey. During the last
      twenty years there has been a 95% correlation between the monthly ADP job
      gain and the rise in private sector nonfarm payrolls.</p>
      
      <p>The ADP survey is based on ADP's business payroll transaction system
      covering 406,000 companies and roughly 23 million employees. The data are
      processed by Moody's Analytics Inc., then calibrated and aligned with the
      BLS data. Extensive information on the methodology is available <a href="http://www.adpemploymentreport.com/common/docs/ADP-NER-Methodology-Exec-Summary.pdf">here</a>.</p>
      
      <p>Service-producing payrolls led the job gains with a 230,000 increase
      (2.1% y/y). Jobs in professional and business services increased 77,000
      (3.3% y/y); transportation and utilities employment grew 50,000 (2.0% y/y)
      while financial activities headcount gained 11,000 (0.5% y/y).
      Goods-producing payrolls rose 16,000 (2.0% y/y). Factory sector payrolls
      gained 12,000 (0.8% y/y), the strongest rise since December. Construction
      payrolls jumped 36,000 (4.0% y/y), the firmest rise of the expansion.</p>
      
      <p>Hiring amongst small businesses totaled 117,000 (2.1% y/y).
      Medium-sized firms' payrolls advanced 115,000 (1.8% y/y) while jobs at
      large-size companies rose 49,000 (2.6% y/y).</p>
      
      <p>The ADP National Employment Report data are maintained in Haver's <b>USECON</b>
      database; historical figures date back to March 2001. The figures in this
      report cover jobs only in the private sector. The expectation figure is
      available in Haver's <b>AS1REPNA</b> database.</p>
      
      <p><b>Monetary Policy and Financial Stability</b> is today's speech by Fed
      Chair Janet L. Yellen and it is available <a href="http://www.federalreserve.gov/newsevents/speech/yellen20140702a.htm">here</a>.</p>
      
      
      <p><a href="/comment/140702c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140702c.png"></a>
      <a href="/comment/140702d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140702d.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" >ADP/Moody's National
              Employment Report</th>
            <th scope="col" >Jun</th>
            <th scope="col" >May</th>
            <th scope="col" >Apr</th>
            <th scope="col" >Y/Y</th>
            <th scope="col" >2013</th>
            <th scope="col" >2012</th>
            <th scope="col" >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Nonfarm Private Payroll Employment
              (m/m chg, 000s)</td>
            <td  >281</td>
            <td  >179</td>
            <td  >215</td>
            <td  >2.1%</td>
            <td  >2.0%</td>
            <td  >2.3%</td>
            <td  >1.8%</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Small Payroll (1-49)</td>
            <td  >117</td>
            <td  >82</td>
            <td  >76</td>
            <td  >2.1</td>
            <td  >2.1</td>
            <td  >2.5</td>
            <td  >1.1</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Medium Payroll (50-499)</td>
            <td  >115</td>
            <td  >62</td>
            <td  >82</td>
            <td  >1.8</td>
            <td  >1.6</td>
            <td  >2.0</td>
            <td  >2.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Large Payroll (&gt;500)</td>
            <td  >49</td>
            <td  >37</td>
            <td  >56</td>
            <td  >2.6</td>
            <td  >2.3</td>
            <td  >2.4</td>
            <td  >2.7</td>
          </tr>
          <tr>
            <td class="firstcol" >Goods-Producing</td>
            <td  >51</td>
            <td  >31</td>
            <td  >24</td>
            <td  >2.0</td>
            <td  >1.6</td>
            <td  >2.2</td>
            <td  >1.7</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Manufacturing</td>
            <td  >12</td>
            <td  >11</td>
            <td  >4</td>
            <td  >0.8</td>
            <td  >0.6</td>
            <td  >1.6</td>
            <td  >1.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Service-Producing</td>
            <td  >230</td>
            <td  >148</td>
            <td  >181</td>
            <td  >2.1</td>
            <td  >2.0</td>
            <td  >2.3</td>
            <td  >1.8</td>
            </tr>
              </tbody>
            </table>
            </span>
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      <p><a href="/comment/140701o_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140701o.png"></a>
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      <p>June was a strong prelude to summer for auto-dealers. According to the 
      Autodata Corporation, <b>unit sales of light vehicles increased 1.2% (6.9% y/y) versus May to 16.98
      million (SAAR)</b>, the highest level since January 2006.<b> </b>The gain
      raised sales by 10.3% since December and 87.7% since the recession low.</p>
      
      <p><b>Auto purchases</b> improved 3.1% (5.3% y/y) to 8.30 million after a
      6.6% rise. Sales of domestic autos increased 4.2% (5.2% y/y) to 5.91
      million after a 6.5% May gain. Sales of imports edged 0.6% higher (5.5%
      y/y) to 2.39 million following a 6.8% jump.</p>
      
      <p>Sales of <b>light trucks </b>slipped 0.5% m/m (+8.6% y/y) to 8.69
      million after a 2.8% rise. For the second consecutive month, imported
      light truck sales showed notable strength. The 7.1% increase (-1.6% y/y)
      to 1.14 million followed a similar gain in May. Domestic light truck sales
      declined 1.5% (+10.3% y/y) to 7.55 million and reversed most of the prior
      month's gain.</p>
      
      <p><b>Imports' share </b>of the U.S. light vehicle market improved to 20.8%
      last month. By vehicle type, imports' share of the U.S. car market fell to
      28.8%. Imports' share of the light truck market increased to 13.1%.</p>
      
      <p>U.S. vehicle sales figures can be found in Haver's<b> USECON </b>database.</p>
      
      <p><b>Increasing House Values Playing Significant Role in Wealth Recovery</b>
      from the Federal Reserve Bank of St. Louis is available <a href="http://www.stlouisfed.org/on-the-economy/increasing-house-values-playing-significant-role-in-wealth-recovery">here</a>.</p>

      <p><a href="/comment/140701q_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140701q.png"></a>
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      <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" >Light Vehicle Sales
              (SAAR, Mil. Units)</th>
            <th scope="col" ><b>Jun</b></th>
            <th scope="col" ><b>May</b></th>
            <th scope="col" ><b>Apr</b></th>
            <th scope="col" ><b>Y/Y %</b></th>
            <th scope="col" ><b>2013</b></th>
            <th scope="col" ><b>2012</b></th>
            <th scope="col" ><b>2011</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Total</td>
            <td  >16.98</td>
            <td  >16.77</td>
            <td  >16.04</td>
            <td  >6.9</td>
            <td  >15.55</td>
            <td  >14.49</td>
            <td  >12.78</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Autos</td>
            <td  >8.30</td>
            <td  >8.04</td>
            <td  >7.55</td>
            <td  >5.3</td>
            <td  >7.77</td>
            <td  >7.42</td>
            <td  >6.23</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Domestic</td>
            <td  >5.91</td>
            <td  >5.67</td>
            <td  >5.33</td>
            <td  >5.2</td>
            <td  >5.47</td>
            <td  >5.10</td>
            <td  >4.21</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Imported</td>
            <td  >2.39</td>
            <td  >2.37</td>
            <td  >2.22</td>
            <td  >5.5</td>
            <td  >2.29</td>
            <td  >2.32</td>
            <td  >2.02</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Light Trucks</td>
            <td  >8.69</td>
            <td  >8.73</td>
            <td  >8.49</td>
            <td  >8.6</td>
            <td  >7.79</td>
            <td  >7.08</td>
            <td  >6.55</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Domestic</td>
            <td  >7.55</td>
            <td  >7.67</td>
            <td  >7.51</td>
            <td  >10.3</td>
            <td  >6.71</td>
            <td  >6.10</td>
            <td  >5.55</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Imported</td>
            <td  >1.14</td>
            <td  >1.06</td>
            <td  >0.99</td>
            <td  >-1.6</td>
            <td  >1.08</td>
            <td  >0.97</td>
            <td  >1.00</td>
   </tr>
              </tbody>
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June was a strong prelude to summer for auto-dealers. According to the Autodata Corporation, unit sales of light vehicles increased 1.2% (6.9% y/y) versus May to 16.98 million (SAAR), the highest level since January 2006. The gain [...]

U.S. Vehicle Sales Reach Highest Level Since 2006

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      <p></p>
      
      <p><a href="/comment/140701k_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140701k.png"></a>
      <a href="/comment/140701l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140701l.png"></a></p>
      
      <p>The value of construction put-in-place edged up 0.1% (6.6% y/y) during
      May following a 0.8% April increase, revised from 0.2%. Figures back to
      January 2008 were revised. Since December, the value of construction
      spending has fallen 0.5%. The latest increase disappointed expectations
      for a 0.4% rise in the Action Economics Forecast Survey.</p>
      
      <p>Private sector construction outlays slipped 0.3% in May (+9.0% y/y) and
      reversed a 0.3% April gain. Residential building declined 1.5% (+7.5% y/y)
      and forward momentum has slowed drastically since early-2013.
      Single-family homebuilding declined 1.4% in May after a 2.1% increase
      while y/y growth of 10.9% was down from 35.0% y/y early-last year.
      Multi-family building was off 0.5% in May after a 2.1% rise. Momentum here
      also was off significantly. Year-to-year growth of 30.7% was roughly half
      that of late-2012. Spending on improvements fell 1.9% in May, the fifth
      consecutive month of decline. Growth turned to a negative 2.4% y/y versus
      the peak of +13.1% y/y early-last year. To the up-side, nonresidential
      building activity gained 1.1% in May and the year-to-year rise of 10.7%
      followed a 0.6% uptick last year.</p>
      
      <p>The story also is firm in the public sector. The value of 
      building activity here improved 1.0% in May after strong gains
      during the prior two months. Annual growth of 1.2% compares to declines
      ranging from 2.8% to 5.4% since 2010. Spending on education rose 1.7% y/y
      in May after declining as much as 13.4% y/y in 2010. Spending on highways
      &amp; streets rose 2.3% y/y. That's versus the 2.9% y/y decline in 2011
      and little rise since. Still falling at an accelerated 36.0% y/y rate is
      commercial construction, the worst growth rate on record.</p>
      
      <p>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/140701m_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140701m.png"></a>
      <a href="/comment/140701n_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140701n.png"></a></p>
      
      
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

        <thead>
          <tr>
            <th class="firstcol" scope="col" >Construction Put in
              Place (%)</th>
            <th scope="col" >May</th>
            <th scope="col" >Apr</th>
            <th scope="col" >Mar</th>
            <th scope="col" >Y/Y</th>
            <th scope="col" >2013</th>
            <th scope="col" >2012</th>
            <th scope="col" >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Total</td>
            <td  >0.1</td>
            <td  >0.8</td>
            <td  >0.0</td>
            <td  >6.6</td>
            <td  >5.7</td>
            <td  >9.2</td>
            <td  >-2.1</td>
          </tr>
        </tbody>
          <tr class="odd">
            <td class="firstcol" >&nbsp; Private</td>
            <td  >-0.3</td>
            <td  >0.3</td>
            <td  >-0.6</td>
            <td  >9.0</td>
            <td  >10.1</td>
            <td  >16.0</td>
            <td  >-0.1</td>
          </tr>
        <tbody>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential</td>
            <td  >-1.5</td>
            <td  >0.5</td>
            <td  >0.2</td>
            <td  >7.5</td>
            <td  >20.4</td>
            <td  >14.4</td>
            <td  >1.9</td>
          </tr>
        </tbody>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential</td>
            <td  >1.1</td>
            <td  >0.1</td>
            <td  >-1.4</td>
            <td  >10.7</td>
            <td  >0.6</td>
            <td  >17.5</td>
            <td  >-1.8</td>
          </tr>
        <tbody>
          <tr>
            <td class="firstcol" >&nbsp; Public</td>
            <td  >1.0</td>
            <td  >2.1</td>
            <td  >1.6</td>
            <td  >1.2</td>
            <td  >-3.5</td>
            <td  >-2.8</td>
            <td  >-5.4</td>
             </tr>
              </tbody>
            
            
</html>

The value of construction put-in-place edged up 0.1% (6.6% y/y) during May following a 0.8% April increase, revised from 0.2%. Figures back to January 2008 were revised. Since December, the value of construction spending has fallen [...]

U.S. Construction Spending Nudges Higher

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

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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.

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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.

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- 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

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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.

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- 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

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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.

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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.

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**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.

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**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.

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**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.

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**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.

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**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.

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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

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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.

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

Economy in Brief: July 2014

Jump to:

U.S. Payroll Employment Growth Improves; Jobless Rate Falls Further

U.S. Factory Sector Orders Pull Back but Inventories Continue to Increase

U.S. Mortgage Loan Applications and Interest Rates Move Lower

EMU PPI Is Still Weak

U.S. ADP Employment Gain is Strongest Since 2012

U.S. ADP Employment Gain is Strongest Since 2012

U.S. Vehicle Sales Reach Highest Level Since 2006

U.S. Construction Spending Nudges Higher