Tom Moeller

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&bull; Labor market weakness gets underway in March.


&bull; Service-sector employment declines, particularly in small businesses.


The ADP National Employment Report
indicated that nonfarm private payrolls during March fell 27,000 (+1.3% y/y)
following a 179,000 February increase, revised from 183,000. ADP conducts its
monthly survey during the week that includes the 12th of the month, so it
preceded the stronger layoff activity in recent weeks. The latest figure
compared to a 200,000 decline expected in the Action Economics Forecast Survey.

Small payrolls declined 90,000 (-0.3% y/y) following a fairly
steady 21,000 February gain. Medium-sized payrolls rose 7,000 (1.1% y/y) after a
27,000 rise, which was half the January rise. Large-sized payrolls improved 56,000
(2.2% y/y) after a fairly steady steady131,000 rise.

Within industry sectors, employment at goods-producing firms
eased 9,000 (+0.2% y/y) last month after a 12,000 rise, which also was half the
upwardly revised January increase. Construction sector payrolls fell 16,000 last
month (+1.3% y/y), the first decline in nine months. Factory sector employment
improved 6,000 (-0.3% y/y), the first increase in four months. Employment in the
natural resource &amp; mining sector edged 1,000 higher (-2.0% y/y), but was
down versus March 2019.

Employment growth in the private service sector declined 18,000
(+1.5% y/y) after a 167,000 February strengthening. Education &amp; health
services jobs improved a steady 48,000 (2.4% y/y). Financial activities payrolls
held steady (1.3% y/y). These figures were offset by a collapse of 37,000 (+0.7%
y/y) in trade, transportation &amp; utilities, the largest decline in ten years.
Leisure &amp; hospitality employment fell 11,000 (+2.1% y/y) after two monthly
increases of roughly 45,000. Employment in professional &amp; business services
weakened 3,000 (+1.8% y/y). Information sector payrolls declined 7,000 (-0.5% y/y).

The Automatic Data Processing Research Institute survey is
based on ADP's business payroll transaction system covering 411,000 companies
and nearly 24 million employees. The data are processed by Moody's Analytics
Inc., then calibrated and aligned with the BLS establishment survey data. The
ADP data cover private sector employment only.

The ADP National Employment Report data can be found in
Haver's USECON database. Historical figures date back to 2001 for private
employment and the industry breakdown, and 2005 for the business size breakout.
The expectation figure is available in Haver's AS1REPNA database.

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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" >ADP/Moody's National
 Employment Report</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Mar Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Nonfarm Private Payroll Employment (m/m
 chg, 000s)</td>
 <td >-27</td>
 <td >179</td>
 <td >205</td>
 <td >1.3%</td>
 <td >1.5%</td>
 <td >1.8%</td>
 <td >1.7%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Small Payroll (1-49)</td>
 <td >-90</td>
 <td >21</td>
 <td >22</td>
 <td >-0.2</td>
 <td >0.2</td>
 <td >0.6</td>
 <td >1.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Medium Payroll (50-499)</td>
 <td >7</td>
 <td >27</td>
 <td >54</td>
 <td >1.1</td>
 <td >2.0</td>
 <td >2.0</td>
 <td >1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Large Payroll (&gt;500)</td>
 <td >56</td>
 <td >131</td>
 <td >130</td>
 <td >2.2</td>
 <td >1.9</td>
 <td >2.3</td>
 <td >2.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Goods-Producing</td>
 <td >-9</td>
 <td >12</td>
 <td >24</td>
 <td >0.2</td>
 <td >1.6</td>
 <td >2.9</td>
 <td >1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Construction</td>
 <td >-16</td>
 <td >19</td>
 <td >33</td>
 <td >1.3</td>
 <td >2.7</td>
 <td >4.1</td>
 <td >3.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Manufacturing</td>
 <td >6</td>
 <td >-4</td>
 <td >-5</td>
 <td >-0.3</td>
 <td >1.0</td>
 <td >1.9</td>
 <td >0.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Service-Producing</td>
 <td >-18</td>
 <td >167</td>
 <td >181</td>
 <td >1.5</td>
 <td >1.5</td>
 <td >1.6</td>
 <td >1.7</td>
 </tr>
 </tbody>
 </table>
 
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• Labor market weakness gets underway in March. • Service-sector employment declines, particularly in small businesses. The ADP National Employment Report indicated that nonfarm private payrolls during March fell 27,000 (+1.3% y/y) [...]

U.S. ADP Private Payrolls Decline as Coronavirus Effects Begin

Sandy Batten

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Led by a sharp increase in refinancing applications, the Mortgage Bankers Association's Mortgage Loan Application Index rebounded in the week ended March 27, rising 15.3% w/w (73.7% y/y) after having fallen 29.4% w/w in the previous week and 8.4% w/w in the week ended March 13. Purchase applications remained weak (-10.8% w/w and -23.5% y/y) as the first signs of the devastating hit to employment from the spreading coronavirus likely caused potential homebuyers to pull back. In contrast, with mortgage interest rates falling to series lows for some rates, applications for refinancing jumped up 25.5% w/w (167.7% y/y) after having declined 40.7% in the previous two weeks. The refinance share of mortgage activity increased to 75.9% of total applications from 69.3% the previous week. The adjustable-rate mortgage share of activity decreased to 3.2% of total applications.

The effective interest rate on a 15-year fixed-rate mortgage fell markedly to 3.12% in the week ended March 27 from 3.38% the previous week. The effective interest rate on the 30-year fixed-rate mortgage slumped to 3.57%, the lowest rate in the history of the series, from 3.93%. In contrast, the effective rate on a 30-year Jumbo mortgage only edged down 2 basis points to 3.93% after having risen 31 basis points in the previous two weeks. The rate on the 5-year adjustable rate mortgage fell to 3.34% from 3.48%.

The average mortgage loan size fell to $323,700 in the week ended March 27 from $337,000 the previous week. The average loan size of refinancings declined to $322,800 from $337,500. The average loan size for purchases fell to $326,500 from $336,000.

Applications for fixed-rate loans were up 85.8% y/y, while applications for adjustable rate loans fell 41.9% y/y.

The survey covers over 75% of all U.S. retail residential mortgage applications and
has been conducted weekly since 1990. Respondents include mortgage bankers, commercial
banks and thrifts. The base period and value for each index is March 16, 1990=100.
The figures for weekly mortgage applications and interest rates are available in
Haver's SURVEYW database.

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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" >MBA Mortgage Applications (%,
 SA)</th>
 <th>03/27/20</th>
 <th>03/20/20</th>
 <th>03/13/20</th>
 <th>Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Market Index</td>
<td >15.3</td>
<td >-29.4</td>
<td >-8.4</td>
<td >73.7</td>
<td >32.4</td>
<td >-10.4</td>
<td >-17.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Purchase</td>
<td >-10.8</td>
<td >-14.6</td>
<td >-0.9</td>
<td >-23.5</td>
<td >6.6</td>
<td >2.1</td>
<td >5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Refinancing</td>
<td >25.5</td>
<td >-33.8</td>
<td >-10.4</td>
<td >167.7</td>
<td >71.1</td>
<td >-24.3</td>
<td >-34.0</td>
 </tr>
 <tr>
 <td class="firstcol" >15-Year Effective Mortgage Interest Rate
 (%)</td>
<td >3.12</td>
<td >3.38</td>
<td >3.20</td>
<td >3.88</td>
<td >3.71</td>
<td >4.35</td>
<td >3.59</td>
 </tr>
 <tr>
 <td class="firstcol" >30-Year Effective Mortgage Interest Rate
 (%)</td>
<td >3.57</td>
<td >3.93</td>
<td >3.85</td>
<td >4.49</td>
<td >4.34</td>
<td >4.94</td>
<td >4.32</td>
 </tr>
 </tbody>
 </table>
 
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Led by a sharp increase in refinancing applications, the Mortgage Bankers Association's Mortgage Loan Application Index rebounded in the week ended March 27, rising 15.3% w/w (73.7% y/y) after having fallen 29.4% w/w in the previous [...]

U.S. Mortgage Applications Rebound, Led by Refinancing

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April 1, 2020
• Labor market weakness gets underway in March.
• Service-sector employment declines, particularly in
small businesses.
The ADP National Employment Report
indicated that nonfarm private payrolls during March fell 27,000 (+1.3% y/y)
following a 179,000 February increase, revised from 183,000. ADP conducts its
monthly survey during the week that includes the 12th of the month, so it
preceded the stronger layoff activity in recent weeks. The latest figure
compared to a 200,000 decline expected in the Action Economics Forecast Survey. 
Small payrolls declined 90,000 (-0.3% y/y) following a fairly
steady 21,000 February gain. Medium-sized payrolls rose 7,000 (1.1% y/y) after a
27,000 rise, which was half the January rise. Large-sized payrolls improved 56,000
(2.2% y/y) after a fairly steady steady131,000 rise.
Within industry sectors, employment at goods-producing firms
eased 9,000 (+0.2% y/y) last month after a 12,000 rise, which also was half the
upwardly revised January increase. Construction sector payrolls fell 16,000 last
month (+1.3% y/y), the first decline in nine months. Factory sector employment
improved 6,000 (-0.3% y/y), the first increase in four months. Employment in the
natural resource &amp; mining sector edged 1,000 higher (-2.0% y/y), but was
down versus March 2019.
Employment growth in the private service sector declined 18,000
(+1.5% y/y) after a 167,000 February strengthening. Education &amp; health
services jobs improved a steady 48,000 (2.4% y/y). Financial activities payrolls
held steady (1.3% y/y). These figures were offset by a collapse of 37,000 (+0.7%
y/y) in trade, transportation &amp; utilities, the largest decline in ten years.
Leisure &amp; hospitality employment fell 11,000 (+2.1% y/y) after two monthly
increases of roughly 45,000. Employment in professional &amp; business services
weakened 3,000 (+1.8% y/y). Information sector payrolls declined 7,000 (-0.5%
y/y).
The Automatic Data Processing Research Institute survey is
based on ADP's business payroll transaction system covering 411,000 companies
and nearly 24 million employees. The data are processed by Moody's Analytics
Inc., then calibrated and aligned with the BLS establishment survey data. The
ADP data cover private sector employment only.
The ADP National Employment Report data can be found in
Haver's USECON database. Historical figures date back to 2001 for private
employment and the industry breakdown, and 2005 for the business size breakout.
The expectation figure is available in Haver's AS1REPNA database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="1068">ADP/Moody's National
 Employment Report</th>
 <th scope="col" width="114">Mar</th>
 <th scope="col" width="114">Feb</th>
 <th scope="col" width="114">Jan</th>
 <th scope="col" width="114">Mar Y/Y</th>
 <th scope="col" width="114">2019</th>
 <th scope="col" width="114">2018</th>
 <th scope="col" width="115">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1068">Nonfarm Private Payroll Employment (m/m
 chg, 000s)</td>
 <td align="center" width="114">-27</td>
 <td align="center" width="114">179</td>
 <td align="center" width="114">205</td>
 <td align="center" width="114">1.3%</td>
 <td align="center" width="114">1.5%</td>
 <td align="center" width="114">1.8%</td>
 <td align="center" width="115">1.7%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1068">&nbsp;Small Payroll (1-49)</td>
 <td align="center" width="114">-90</td>
 <td align="center" width="114">21</td>
 <td align="center" width="114">22</td>
 <td align="center" width="114">-0.2</td>
 <td align="center" width="114">0.2</td>
 <td align="center" width="114">0.6</td>
 <td align="center" width="115">1.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="1068">&nbsp;Medium Payroll (50-499)</td>
 <td align="center" width="114">7</td>
 <td align="center" width="114">27</td>
 <td align="center" width="114">54</td>
 <td align="center" width="114">1.1</td>
 <td align="center" width="114">2.0</td>
 <td align="center" width="114">2.0</td>
 <td align="center" width="115">1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1068">&nbsp;Large Payroll (&gt;500)</td>
 <td align="center" width="114">56</td>
 <td align="center" width="114">131</td>
 <td align="center" width="114">130</td>
 <td align="center" width="114">2.2</td>
 <td align="center" width="114">1.9</td>
 <td align="center" width="114">2.3</td>
 <td align="center" width="115">2.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="1068">Goods-Producing</td>
 <td align="center" width="114">-9</td>
 <td align="center" width="114">12</td>
 <td align="center" width="114">24</td>
 <td align="center" width="114">0.2</td>
 <td align="center" width="114">1.6</td>
 <td align="center" width="114">2.9</td>
 <td align="center" width="115">1.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="1068">&nbsp; Construction</td>
 <td align="center" width="114">-16</td>
 <td align="center" width="114">19</td>
 <td align="center" width="114">33</td>
 <td align="center" width="114">1.3</td>
 <td align="center" width="114">2.7</td>
 <td align="center" width="114">4.1</td>
 <td align="center" width="115">3.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1068">&nbsp; Manufacturing</td>
 <td align="center" width="114">6</td>
 <td align="center" width="114">-4</td>
 <td align="center" width="114">-5</td>
 <td align="center" width="114">-0.3</td>
 <td align="center" width="114">1.0</td>
 <td align="center" width="114">1.9</td>
 <td align="center" width="115">0.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1068">Service-Producing</td>
 <td align="center" width="114">-18</td>
 <td align="center" width="114">167</td>
 <td align="center" width="114">181</td>
 <td align="center" width="114">1.5</td>
 <td align="center" width="114">1.5</td>
 <td align="center" width="114">1.6</td>
 <td align="center" width="115">1.7</td>
 </tr>
 </tbody>
</table>

&nbsp;
ISM Manufacturing Index Weakens Slightly; Prices Decline 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;April 1, 2020
• Production &amp; new orders weakness offset by slower
product delivery speeds.
• Pricing power eases.
Activity in the factory slowed last month. The Institute for
Supply Management (ISM) reported that its composite index of manufacturing
sector activity for February declined to 50.1 after rising to 50.9 in January.
These figures nevertheless remained above the dividing line between expansion
and contraction in the manufacturing sector. A reading of 50.5 had been expected
in the Action Economics Forecast Survey. During the last 15 years, there has
been a 68% correlation between the composite index and the quarterly change in
real GDP.
The easing in the composite index reflected declines in the
new orders and production components, although at 50.3 the production series
remained significantly improved from 44.8 in December. The jump in the supplier
deliveries reading to 57.3 from 52.9 suggested the slowest speed of product
deliveries since November 2018. The inventories component fell to the low end of
its recent range.
The slight rise in the employment figure to 46.9,
nevertheless, continued to reflect a decline in factory sector payrolls. Twelve
percent (NSA) of factory sector payrolls increased while 19% declined. During
the last 15 years, there has been an 80% correlation between the index and the
m/m change in factory sector payrolls.
The prices paid series fell sharply to 45.9, its lowest level
since October. Seventeen percent (NSA) of survey respondents reported higher
prices while 25% reported declines.
Amongst other series in the survey, the imports figure
plummeted to an expansion low. The export reading slipped to 51.2 (NSA), but
remained up from 47.3 in December. The order backlog index surged to 50.3, its
highest level since last March.
The ISM figures are diffusion indexes where a reading above
50 indicates expansion. The figures from the Institute for Supply Management can
be found in Haver's USECON database; further detail is found in the SURVEYS
database. The expectations number is available in Haver's AS1REPNA
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="724">ISM Mfg (SA)</th>
 <th width="163">Mar</th>
 <th width="163">Feb</th>
 <th width="163">Jan</th>
 <th width="163">Mar'19</th>
 <th width="163">2019</th>
 <th width="164">2018</th>
 <th width="164">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="724">Headline Index</td>
 <td align="center" width="163"></td>
 <td align="center" width="163">50.1</td>
 <td align="center" width="163">50.9</td>
 <td align="center" width="163">54.1</td>
 <td align="center" width="163">51.2</td>
 <td align="center" width="164">58.9</td>
 <td align="center" width="164">57.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="724">&nbsp;New Orders</td>
 <td align="center" width="163"></td>
 <td align="center" width="163">49.8</td>
 <td align="center" width="163">52.0</td>
 <td align="center" width="163">54.9</td>
 <td align="center" width="163">51.1</td>
 <td align="center" width="164">61.6</td>
 <td align="center" width="164">62.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="724">&nbsp;Production</td>
 <td align="center" width="163"></td>
 <td align="center" width="163">50.3</td>
 <td align="center" width="163">54.3</td>
 <td align="center" width="163">55.4</td>
 <td align="center" width="163">51.2</td>
 <td align="center" width="164">60.9</td>
 <td align="center" width="164">60.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="724">&nbsp;Employment</td>
 <td align="center" width="163"></td>
 <td align="center" width="163">46.9</td>
 <td align="center" width="163">46.6</td>
 <td align="center" width="163">53.2</td>
 <td align="center" width="163">50.9</td>
 <td align="center" width="164">56.9</td>
 <td align="center" width="164">56.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="724">&nbsp;Supplier Deliveries</td>
 <td align="center" width="163"></td>
 <td align="center" width="163">57.3</td>
 <td align="center" width="163">52.9</td>
 <td align="center" width="163">55.3</td>
 <td align="center" width="163">52.9</td>
 <td align="center" width="164">62.0</td>
 <td align="center" width="164">56.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="724">&nbsp;Inventories</td>
 <td align="center" width="163"></td>
 <td align="center" width="163">46.5</td>
 <td align="center" width="163">48.8</td>
 <td align="center" width="163">51.6</td>
 <td align="center" width="163">49.8</td>
 <td align="center" width="164">52.9</td>
 <td align="center" width="164">50.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="724">Prices Paid Index (NSA)</td>
 <td align="center" width="163"></td>
 <td align="center" width="163">45.9</td>
 <td align="center" width="163">53.3</td>
 <td align="center" width="163">49.4</td>
 <td align="center" width="163">49.1</td>
 <td align="center" width="164">71.7</td>
 <td align="center" width="164">65.0</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Light Vehicle Sales Hold Steady in February 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;April 1, 2020
The Autodata Corporation reported that sales of light
vehicles during February eased 0.2% (+2.0% y/y) to 17.04 million (SAAR) from
17.07 million in January, revised from 17.05 million. During the last three
months, sales averaged 17.00 million units. Sales have been easing since the
2016 sales peak of 17.55 million units.
Sales of light trucks were off 0.1% (+6.6% y/y) at 12.56
million units. Purchases of domestically-made light trucks fell 0.8% (+7.2% y/y)
to 9.92 million units following January's 4.4% rise. Sales of imported light
trucks improved 2.7% (4.3% y/y) to 2.64 million units after January's 0.4%
improvement.
Trucks' share of the U.S. light vehicle market reached a
record 73.7%, up from a low of 48.8% during all of 2012.
Auto sales weakened 0.2% (-8.9% y/y) to 4.48 million units.
That remained below a peak level of 7.71 million unit sales during all of 2014.
Purchases of domestically-produced cars fell 3.3% (-12.7% y/y) to 3.22 million
units and added to January's decline. Sales of imported cars strengthened 7.7%
(2.4% y/y) to 1.26 million units after rising 0.9% in January.
Imports' share of the U.S. vehicle market rose last month to
22.9% and has been moving sideways for two years. Imports' share of the
passenger car market jumped to 28.1%, its highest level in four months. Imports
share of the light truck market edged higher to 21.0% and remained up from the
12.0% low in January 2015.
U.S. vehicle sales figures can be found in Haver's USECON
database. Additional detail by manufacturer is in the INDUSTRY database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="974">Light Weight Vehicle Sales
 (SAAR, Million Units)</th>
 <th width="127">Mar</th>
 <th width="127">Feb</th>
 <th width="127">Jan</th>
 <th width="128">Mar Y/Y %</th>
 <th width="128">2019</th>
 <th width="128">2018</th>
 <th width="128">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="974">Total</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">17.04</td>
 <td align="center" width="127">17.07</td>
 <td align="center" width="128">2.0</td>
 <td align="center" width="128">16.99</td>
 <td align="center" width="128">17.27</td>
 <td align="center" width="128">17.23</td>
 </tr>
 <tr>
 <td class="firstcol" width="974">&nbsp;Autos</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">4.48</td>
 <td align="center" width="127">4.49</td>
 <td align="center" width="128">-8.9</td>
 <td align="center" width="128">4.80</td>
 <td align="center" width="128">5.36</td>
 <td align="center" width="128">6.16</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="974">&nbsp;&nbsp;Domestic</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">3.22</td>
 <td align="center" width="127">3.33</td>
 <td align="center" width="128">-12.7</td>
 <td align="center" width="128">3.52</td>
 <td align="center" width="128">4.00</td>
 <td align="center" width="128">4.58</td>
 </tr>
 <tr>
 <td class="firstcol" width="974">&nbsp;&nbsp;Imported</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">1.26</td>
 <td align="center" width="127">1.17</td>
 <td align="center" width="128">2.4</td>
 <td align="center" width="128">1.28</td>
 <td align="center" width="128">1.36</td>
 <td align="center" width="128">1.59</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="974">&nbsp;Light Trucks</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">12.56</td>
 <td align="center" width="127">12.57</td>
 <td align="center" width="128">6.6</td>
 <td align="center" width="128">12.18</td>
 <td align="center" width="128">11.92</td>
 <td align="center" width="128">11.07</td>
 </tr>
 <tr>
 <td class="firstcol" width="974">&nbsp;&nbsp;Domestic</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">9.92</td>
 <td align="center" width="127">10.00</td>
 <td align="center" width="128">7.2</td>
 <td align="center" width="128">9.65</td>
 <td align="center" width="128">9.44</td>
 <td align="center" width="128">9.00</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="974">&nbsp;&nbsp;Imported</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">2.64</td>
 <td align="center" width="127">2.57</td>
 <td align="center" width="128">4.3</td>
 <td align="center" width="128">2.53</td>
 <td align="center" width="128">2.48</td>
 <td align="center" width="128">2.07</td>
 </tr>
 </tbody>
</table>





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• Labor market weakness gets underway in March. • Service-sector employment declines, particularly in small businesses

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<title>Texas Factory Activity Improvement Led by Production by Tom Moeller&nbsp;
March 30</title>
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April 1, 2020
• Labor market weakness gets underway in March.
• Service-sector employment declines, particularly in
small businesses.
The ADP National Employment Report
indicated that nonfarm private payrolls during March fell 27,000 (+1.3% y/y)
following a 179,000 February increase, revised from 183,000. ADP conducts its
monthly survey during the week that includes the 12th of the month, so it
preceded the stronger layoff activity in recent weeks. The latest figure
compared to a 200,000 decline expected in the Action Economics Forecast Survey. 
Small payrolls declined 90,000 (-0.3% y/y) following a fairly
steady 21,000 February gain. Medium-sized payrolls rose 7,000 (1.1% y/y) after a
27,000 rise, which was half the January rise. Large-sized payrolls improved 56,000
(2.2% y/y) after a fairly steady steady131,000 rise.
Within industry sectors, employment at goods-producing firms
eased 9,000 (+0.2% y/y) last month after a 12,000 rise, which also was half the
upwardly revised January increase. Construction sector payrolls fell 16,000 last
month (+1.3% y/y), the first decline in nine months. Factory sector employment
improved 6,000 (-0.3% y/y), the first increase in four months. Employment in the
natural resource &amp; mining sector edged 1,000 higher (-2.0% y/y), but was
down versus March 2019.
Employment growth in the private service sector declined 18,000
(+1.5% y/y) after a 167,000 February strengthening. Education &amp; health
services jobs improved a steady 48,000 (2.4% y/y). Financial activities payrolls
held steady (1.3% y/y). These figures were offset by a collapse of 37,000 (+0.7%
y/y) in trade, transportation &amp; utilities, the largest decline in ten years.
Leisure &amp; hospitality employment fell 11,000 (+2.1% y/y) after two monthly
increases of roughly 45,000. Employment in professional &amp; business services
weakened 3,000 (+1.8% y/y). Information sector payrolls declined 7,000 (-0.5%
y/y).
The Automatic Data Processing Research Institute survey is
based on ADP's business payroll transaction system covering 411,000 companies
and nearly 24 million employees. The data are processed by Moody's Analytics
Inc., then calibrated and aligned with the BLS establishment survey data. The
ADP data cover private sector employment only.
The ADP National Employment Report data can be found in
Haver's USECON database. Historical figures date back to 2001 for private
employment and the industry breakdown, and 2005 for the business size breakout.
The expectation figure is available in Haver's AS1REPNA database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="1068">ADP/Moody's National
 Employment Report</th>
 <th scope="col" width="114">Mar</th>
 <th scope="col" width="114">Feb</th>
 <th scope="col" width="114">Jan</th>
 <th scope="col" width="114">Mar Y/Y</th>
 <th scope="col" width="114">2019</th>
 <th scope="col" width="114">2018</th>
 <th scope="col" width="115">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1068">Nonfarm Private Payroll Employment (m/m
 chg, 000s)</td>
 <td align="center" width="114">-27</td>
 <td align="center" width="114">179</td>
 <td align="center" width="114">205</td>
 <td align="center" width="114">1.3%</td>
 <td align="center" width="114">1.5%</td>
 <td align="center" width="114">1.8%</td>
 <td align="center" width="115">1.7%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1068">&nbsp;Small Payroll (1-49)</td>
 <td align="center" width="114">-90</td>
 <td align="center" width="114">21</td>
 <td align="center" width="114">22</td>
 <td align="center" width="114">-0.2</td>
 <td align="center" width="114">0.2</td>
 <td align="center" width="114">0.6</td>
 <td align="center" width="115">1.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="1068">&nbsp;Medium Payroll (50-499)</td>
 <td align="center" width="114">7</td>
 <td align="center" width="114">27</td>
 <td align="center" width="114">54</td>
 <td align="center" width="114">1.1</td>
 <td align="center" width="114">2.0</td>
 <td align="center" width="114">2.0</td>
 <td align="center" width="115">1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1068">&nbsp;Large Payroll (&gt;500)</td>
 <td align="center" width="114">56</td>
 <td align="center" width="114">131</td>
 <td align="center" width="114">130</td>
 <td align="center" width="114">2.2</td>
 <td align="center" width="114">1.9</td>
 <td align="center" width="114">2.3</td>
 <td align="center" width="115">2.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="1068">Goods-Producing</td>
 <td align="center" width="114">-9</td>
 <td align="center" width="114">12</td>
 <td align="center" width="114">24</td>
 <td align="center" width="114">0.2</td>
 <td align="center" width="114">1.6</td>
 <td align="center" width="114">2.9</td>
 <td align="center" width="115">1.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="1068">&nbsp; Construction</td>
 <td align="center" width="114">-16</td>
 <td align="center" width="114">19</td>
 <td align="center" width="114">33</td>
 <td align="center" width="114">1.3</td>
 <td align="center" width="114">2.7</td>
 <td align="center" width="114">4.1</td>
 <td align="center" width="115">3.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1068">&nbsp; Manufacturing</td>
 <td align="center" width="114">6</td>
 <td align="center" width="114">-4</td>
 <td align="center" width="114">-5</td>
 <td align="center" width="114">-0.3</td>
 <td align="center" width="114">1.0</td>
 <td align="center" width="114">1.9</td>
 <td align="center" width="115">0.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1068">Service-Producing</td>
 <td align="center" width="114">-18</td>
 <td align="center" width="114">167</td>
 <td align="center" width="114">181</td>
 <td align="center" width="114">1.5</td>
 <td align="center" width="114">1.5</td>
 <td align="center" width="114">1.6</td>
 <td align="center" width="115">1.7</td>
 </tr>
 </tbody>
</table>

&nbsp;
ISM Manufacturing Index Weakens in March 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;April 1, 2020
• Broad-based component declines led by fewer new orders.
• Pricing power falls sharply.
• Most readings move below the break-even level of 50.
Activity in the factory sector weakened just slightly last
month despite the onset of the coronavirus. The Institute for Supply Management
(ISM) reported that its composite index of manufacturing sector activity for
March fell to 49.1 after easing to 50.1 in February. A reading of 50.5 had been
expected in the Action Economics Forecast Survey. During the last 15 years,
there has been a 68% correlation between the composite index and the quarterly
change in real GDP.
The new orders index fell to 42.2, its lowest level since
March 2009. The production measure also fell sharply to 47.7, down versus the
cycle high of 64.2 in January 2018. 
Also declining to its lowest point since May 2009 was the
employment measure to 43.8. Just nine percent (NSA) of respondents reported
higher payrolls while 21% reported a decline. During the last 15 years, there
has been 80% correlation between the employment index and the m/m change in
factory sector payrolls.
The supplier delivery measure surged to 65.0 from 57.3,
indicating the slowest product delivery speeds since June 2018. Holding fairly
steady m/m at 46.9 was the inventory index, but that was down from 53.9 in
August 2018.
The prices paid index declined sharply to 37.4 (NSA), its
lowest point since January 2016. Only 12% of respondents reported higher prices
while 37% reported a decline.&nbsp; 
Other series in the ISM report indicated weakness. The export
order measure fell to 46.6, the lowest point in six months and down from a high
of 62.8 in February 2018. The import series fell to an expansion low of 42.1 and
the order backlog measure fell to 45.9 from 50.4 twelve months
earlier.&nbsp;&nbsp; 
The ISM figures are diffusion indexes where a reading above
50 indicates expansion. The figures from the Institute for Supply Management can
be found in Haver's USECON database; further detail is found in the SURVEYS
database. The expectations number is available in Haver's AS1REPNA
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="724">ISM Mfg (SA)</th>
 <th width="163">Mar</th>
 <th width="163">Feb</th>
 <th width="163">Jan</th>
 <th width="163">Mar'19</th>
 <th width="163">2019</th>
 <th width="164">2018</th>
 <th width="164">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="724">Composite Index</td>
 <td align="center" width="163">49.1</td>
 <td align="center" width="163">50.1</td>
 <td align="center" width="163">50.9</td>
 <td align="center" width="163">54.6</td>
 <td align="center" width="163">51.2</td>
 <td align="center" width="164">58.9</td>
 <td align="center" width="164">57.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="724">&nbsp;New Orders</td>
 <td align="center" width="163">42.2</td>
 <td align="center" width="163">49.8</td>
 <td align="center" width="163">52.0</td>
 <td align="center" width="163">55.5</td>
 <td align="center" width="163">51.1</td>
 <td align="center" width="164">61.6</td>
 <td align="center" width="164">62.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="724">&nbsp;Production</td>
 <td align="center" width="163">47.7</td>
 <td align="center" width="163">50.3</td>
 <td align="center" width="163">54.3</td>
 <td align="center" width="163">55.1</td>
 <td align="center" width="163">51.2</td>
 <td align="center" width="164">60.9</td>
 <td align="center" width="164">60.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="724">&nbsp;Employment</td>
 <td align="center" width="163">43.8</td>
 <td align="center" width="163">46.9</td>
 <td align="center" width="163">&nbsp;46.6</td>
 <td align="center" width="163">57.1</td>
 <td align="center" width="163">50.9</td>
 <td align="center" width="164">56.9</td>
 <td align="center" width="164">56.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="724">&nbsp;Supplier Deliveries</td>
 <td align="center" width="163">65.0</td>
 <td align="center" width="163">57.3</td>
 <td align="center" width="163">52.9</td>
 <td align="center" width="163">54.9</td>
 <td align="center" width="163">52.9</td>
 <td align="center" width="164">62.0</td>
 <td align="center" width="164">56.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="724">&nbsp;Inventories</td>
 <td align="center" width="163">46.9</td>
 <td align="center" width="163">46.5</td>
 <td align="center" width="163">48.8</td>
 <td align="center" width="163">50.6</td>
 <td align="center" width="163">49.8</td>
 <td align="center" width="164">52.9</td>
 <td align="center" width="164">50.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="724">Prices Paid Index (NSA)</td>
 <td align="center" width="163">37.4</td>
 <td align="center" width="163">45.9</td>
 <td align="center" width="163">53.3</td>
 <td align="center" width="163">54.3</td>
 <td align="center" width="163">49.1</td>
 <td align="center" width="164">71.7</td>
 <td align="center" width="164">65.0</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Light Vehicle Sales Hold Steady in February 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;April 1, 2020
The Autodata Corporation reported that sales of light
vehicles during February eased 0.2% (+2.0% y/y) to 17.04 million (SAAR) from
17.07 million in January, revised from 17.05 million. During the last three
months, sales averaged 17.00 million units. Sales have been easing since the
2016 sales peak of 17.55 million units.
Sales of light trucks were off 0.1% (+6.6% y/y) at 12.56
million units. Purchases of domestically-made light trucks fell 0.8% (+7.2% y/y)
to 9.92 million units following January's 4.4% rise. Sales of imported light
trucks improved 2.7% (4.3% y/y) to 2.64 million units after January's 0.4%
improvement.
Trucks' share of the U.S. light vehicle market reached a
record 73.7%, up from a low of 48.8% during all of 2012.
Auto sales weakened 0.2% (-8.9% y/y) to 4.48 million units.
That remained below a peak level of 7.71 million unit sales during all of 2014.
Purchases of domestically-produced cars fell 3.3% (-12.7% y/y) to 3.22 million
units and added to January's decline. Sales of imported cars strengthened 7.7%
(2.4% y/y) to 1.26 million units after rising 0.9% in January.
Imports' share of the U.S. vehicle market rose last month to
22.9% and has been moving sideways for two years. Imports' share of the
passenger car market jumped to 28.1%, its highest level in four months. Imports
share of the light truck market edged higher to 21.0% and remained up from the
12.0% low in January 2015.
U.S. vehicle sales figures can be found in Haver's USECON
database. Additional detail by manufacturer is in the INDUSTRY database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="974">Light Weight Vehicle Sales
 (SAAR, Million Units)</th>
 <th width="127">Mar</th>
 <th width="127">Feb</th>
 <th width="127">Jan</th>
 <th width="128">Mar Y/Y %</th>
 <th width="128">2019</th>
 <th width="128">2018</th>
 <th width="128">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="974">Total</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">17.04</td>
 <td align="center" width="127">17.07</td>
 <td align="center" width="128">2.0</td>
 <td align="center" width="128">16.99</td>
 <td align="center" width="128">17.27</td>
 <td align="center" width="128">17.23</td>
 </tr>
 <tr>
 <td class="firstcol" width="974">&nbsp;Autos</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">4.48</td>
 <td align="center" width="127">4.49</td>
 <td align="center" width="128">-8.9</td>
 <td align="center" width="128">4.80</td>
 <td align="center" width="128">5.36</td>
 <td align="center" width="128">6.16</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="974">&nbsp;&nbsp;Domestic</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">3.22</td>
 <td align="center" width="127">3.33</td>
 <td align="center" width="128">-12.7</td>
 <td align="center" width="128">3.52</td>
 <td align="center" width="128">4.00</td>
 <td align="center" width="128">4.58</td>
 </tr>
 <tr>
 <td class="firstcol" width="974">&nbsp;&nbsp;Imported</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">1.26</td>
 <td align="center" width="127">1.17</td>
 <td align="center" width="128">2.4</td>
 <td align="center" width="128">1.28</td>
 <td align="center" width="128">1.36</td>
 <td align="center" width="128">1.59</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="974">&nbsp;Light Trucks</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">12.56</td>
 <td align="center" width="127">12.57</td>
 <td align="center" width="128">6.6</td>
 <td align="center" width="128">12.18</td>
 <td align="center" width="128">11.92</td>
 <td align="center" width="128">11.07</td>
 </tr>
 <tr>
 <td class="firstcol" width="974">&nbsp;&nbsp;Domestic</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">9.92</td>
 <td align="center" width="127">10.00</td>
 <td align="center" width="128">7.2</td>
 <td align="center" width="128">9.65</td>
 <td align="center" width="128">9.44</td>
 <td align="center" width="128">9.00</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="974">&nbsp;&nbsp;Imported</td>
 <td align="center" width="127"></td>
 <td align="center" width="127">2.64</td>
 <td align="center" width="127">2.57</td>
 <td align="center" width="128">4.3</td>
 <td align="center" width="128">2.53</td>
 <td align="center" width="128">2.48</td>
 <td align="center" width="128">2.07</td>
 </tr>
 </tbody>
</table>





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&bull;

&bull;

&bull;


The Chicago Purchasing Managers Business Barometer rebounded to 49.0 in February..................





The MNI Chicago Report is produced by MNI in partnership with ISM-Chicago.
The survey covers a sample of over 200 purchasing professionals in the Chicago
area with a monthly response rate of about 50%. Summary data are contained in
Haver's USECON database, with detail including the ISM-style index in the SURVEYS database.
The Action Economics Forecast Survey is available in AS1REPNA.

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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" >Chicago Purchasing Managers Index (%,
 SA)</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Mar '19</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >General Business Barometer</td>
<td >49.0</td>
<td >42.9</td>
<td >48.2</td>
<td >61.6</td>
<td >51.3</td>
<td >62.4</td>
<td >60.8</td>
 </tr>
 <tr>
 <td class="firstcol" >ISM-Adjusted General Business Barometer</td>
<td >50.8</td>
<td >44.9</td>
<td >48.6</td>
<td >58.2</td>
<td >51.4</td>
<td >60.8</td>
<td >59.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Production</td>
<td >51.0</td>
<td >42.7</td>
<td >46.5</td>
<td >62.8</td>
<td >51.2</td>
<td >64.5</td>
<td >64.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; New Orders</td>
<td >49.1</td>
<td >41.5</td>
<td >47.6</td>
<td >64.6</td>
<td >52.0</td>
<td >63.8</td>
<td >63.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Order Backlogs</td>
<td >38.2</td>
<td >34.6</td>
<td >44.8</td>
<td >60.5</td>
<td >46.9</td>
<td >58.0</td>
<td >55.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Inventories</td>
<td >48.1</td>
<td >40.2</td>
<td >46.1</td>
<td >49.0</td>
<td >48.7</td>
<td >55.4</td>
<td >54.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Employment</td>
<td >44.5</td>
<td >47.0</td>
<td >47.2</td>
<td >54.3</td>
<td >49.6</td>
<td >55.3</td>
<td >52.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Supplier Deliveries</td>
<td >61.3</td>
<td >53.3</td>
<td >55.4</td>
<td >60.1</td>
<td >55.6</td>
<td >64.8</td>
<td >59.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Prices Paid</td>
<td >52.9</td>
<td >56.1</td>
<td >58.1</td>
<td >68.3</td>
<td >58.5</td>
<td >73.9</td>
<td >64.0</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

• • • The Chicago Purchasing Managers Business Barometer rebounded to 49.0 in February.................. The MNI Chicago Report is produced by MNI in partnership with ISM-Chicago. The survey covers a sample of over 200 purchasing [...]

U.S. Chicago Business Barometer Fell in March

Robert Brusca

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China has logged an exceptional snapback in its manufacturing and nonmanufacturing PMIs in March. In February, China shocked the world by posting a manufacturing PMI that fell to 35.7 from 50.0 and a nonmanufacturing PMI that fell to 29.6 from 54.1. These were shocking and dramatic drops that occurred as China was practicing isolation and lockdown to combat the coronavirus spread. But suddenly one month later with Wuhan only beginning to come out of lockdown and conditions still not really normalized, China's PMI gauge has shot up to 52.0 for manufacturing and 52.3 for nonmanufacturing. The manufacturing gauge is up above its January reading. Nonmanufacturing and manufacturing readings both are stronger than their respective 12-month averages.

Snapback is still insufficient 
Still, manufacturing is outperforming services; it was last stronger than its March reading in September 2017. Nonmanufacturing reading, however, is weaker in March that every single month prior to February 2020 on record. The March nonmanufacturing PMI is stronger than the average over 12 months, six months and three months only because those averages include the exceptional weakness in February 2020. As for manufacturing, we will see how the PMI fares next month now that it is at a reading of 52.0.

Manufacturing should recover faster 
The fuller and more rapid rebound in manufacturing compared to nonmanufacturing is not surprising considering the nature of the beasts. Manufacturing is a very structured activity and firms can more easily ramp up output on their own say-so. Goods production also features inventory management. I'd expect firms to be facing strong demands for goods and depleted inventories at their customers. But the nonmanufacturing sector that is dominated by services is for the most part a hand-to-mouth demand fulfillment sector. In the wake of such a crisis, while we can expect that people to want to get out of lockdown and to resume their normal lives, we can also expect some reticence to go back to old habits. And of course, there is no inventorying meals away from home. Coming out of a lockdown an action meant to reduce social interactions especially in an environment in which the virus has not been eliminated, we would expect a cautious rebound. This month's rebound is much more vigorous than cautious even though it lags behind manufacturing.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200331.png" width="660" height="180">


Is China a template? 
China's sharp rebound has caught a lot of attention. Can recovery really be so full and so fast? And can other nations follow China's example?

PMIs: what they are and are not 
These questions meld several elements into a discussion of their answer. One factor is that the PMI is a statistic of breadth not of strength. It looks at month-to-month changes in breadth. So breadth has jumped sharply in March relative to extremely depressed levels in February. Any improvement in output month-to-month generates a positive diffusion response. I suspect that despite the impressive recovery registered by diffusion, output in China is still relatively weak by recent standards. But diffusion will not tell us that. It is true that we often infer strength from breadth, but that does not work here.

Evaluating 'other data' 
We could also see some strong rebounds in other conventional (count 'em up) gauges like industrial output and retail sales as both output and sales will rise from a very depressed base. In that case, the year-on-year change will provide somewhat better guidance than the month-to-month changes.

Total political and economic control vs. democracies 
As for the suddenness of the rebound, well here we have to appeal to the fact that China is a communist state and that the authorities exercised broad and draconian power including using the most invasive surveillance system on the planet to enforce its lockdown.

China's control: an example 
The story of the effectiveness of China's surveillance system that got my attention concerned a car that China's traffic camera's observed leaving and infected area, driving to a less infected area. By the time that driver got home, Chinese police were waiting. They informed him of his 14-day quarantine and said that his boss had already been contacted on the matter. After 12 days, this same persons got cabin fever and went out to the park at which time surveillance cameras ID'd him; the police met him in the park ordering him back to isolation for the remaining two days. No Western country will have that sort of containment and compliance capability. And no western country acted that fast or comprehensively to crack down on the virus. In fact, western nations and others generally had the virus insinuated into their countries in a diffused fashion instead of in one spot. Some were the victims of super-spreaders whereas in Wuhan the center of the crisis was local and remained local for a long while until a long gestation period laid the groundwork for spreading and then panic set in and an exodus occurred.

Situations outside China are not like China 
The U.S. has infections across the country as do other western nations. There is no single center of the epidemic in any of these places, but each seems to have its own 'hot-spot.' We can expect that putting the virus behind will be a truly drawn out process and it will not be accomplished without the ability to test widely. So while testing capabilities are still ramping up globally, the time is still not right to think that stopping the spread is right around the corner.

Still need a better plan 
However, as I have mentioned many, many times by now, there is an ability to better shelter the aged and the other at-risk population so that the virus will not spread to the most vulnerable and that will also help to reduce the load on hospitals. In France in particular, a number of rest homes seem to have been infected with devastating consequences. There is no doubt that the virus is a killer and must be stopped, however, it is equally clear that it is a much bigger risk to some portions of the population compared to others. Health policy should use the known facts about demographic vulnerabilities to help form a policy to deal with it.

Sheltering in place is discriminatory 
The incoming commentary from Wuhan shows just how unevenly this virus has hit people. Wealthy Chinese who could afford to stay inside have praised the government for the policy. Poor people and small business owners complain of how they have been ruined. The World Bank projects a sharp rising in poverty because of the virus.

Life after Virus 
Italy is using the virus and the ramp up in its spending and debt as an excuse to seek debt forgiveness like that offered to others in the wake of WWII. Italy has a point, though it is not clear that it will make any progress on this front. I think the real question will be after this is dealt with how China will be treated. Its poor public health response and unwillingness, initially, to sacrifice growth allowed this thing that might have been contained to Wuhan to spread to 177 countries globally. China has been a reluctant international citizen in many respects. It pursues policies against human rights within its borders claiming sovereignty. It pollutes a great deal but pollution knows no boundaries. It is obstreperous about international agreements and law including its grab of the South China Sea that the World Court did not recognize and called illegal. China ignored that ruling. It could not be clearer that with so many international linkages 'sovereignty' may not have the same meaning in the future as it does today. It will be interesting to see what the global community will want to do to deal with China and the amazing damage caused by its negligence when this crisis passes. Have we learned anything or will we just fiddle dee-dee it away?

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China has logged an exceptional snapback in its manufacturing and nonmanufacturing PMIs in March. In February, China shocked the world by posting a manufacturing PMI that fell to 35.7 from 50.0 and a nonmanufacturing PMI that fell to [...]

China's PMIs Spurt...Is It Over Already? Hardly

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The Conference Board's Index of Consumer Confidence declined
9.5% (-3.4% y/y) during March to a level of 120.0 following a 1.7% February
gain, revised from 0.2%. A decline to an index level of 114.8 had been expected
in the Action Economics Forecast Survey. Over the last 20 years, there has been
a 70% correlation between the level of confidence and the y/y change in real
consumer spending.

The index of consumer expectations plunged 18.4% (-10.3% y/y)
to the lowest level since October 2016. A lessened 18.2% of respondents felt
that business conditions would improve, down from a 26.9% high in March 2017. A
greatly lessened 15.5% of respondents felt there would be more jobs. That was
reduced from a 23.8% high in March 2017. Somewhat fewer respondents felt that
income would increase.

The present situation index eased 0.9% (+2.9% y/y) after a
2.6% decline. A fairly steady 39.6% of respondents felt that business conditions
were good and a reduced 44.9% thought that jobs were plentiful. Jobs were viewed
as hard to get by 13.9%, which was steady m/m, but up from 11.0% during the last six months.

Expectations for the inflation rate in twelve months were
steady m/m at 4.5%, but that was down from a high of 5.1% nine months earlier.
Interest rates were expected to move higher in 12 months by 35.3% of
respondents, half the percentage during 2018. A reduced 1.6% planned to buy a
new home, but that remained up from 0.9% in December. A greatly lessened 3.8%
planned to buy a new car while 47.6% planned to buy a major appliance, down from
55.0% in February.

By age group, the index of confidence amongst those under age
35 declined 9.6% (-4.5% y/y). For respondents aged 35-54, confidence fell 8.4%
(-2.6% y/y) and for those over age 55, it fell 9.4% (-4.1% y/y).

The Consumer Confidence data are available in Haver's CBDB
database. The total indexes appear in USECON, and the market expectations
are in AS1REPNA.

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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" >Conference Board
 (SA, % Chg.)</th>
 <th>Mar</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Mar Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Consumer Confidence Index</td>
 <td>-9.5</td>
 <td>1.7</td>
 <td>1.7</td>
 <td>-3.4</td>
 <td>-1.4</td>
 <td>8.0</td>
 <td>20.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Present
 Situation</td>
 <td>-0.9</td>
 <td>-2.6</td>
 <td>2.0</td>
 <td>2.9</td>
 <td>3.1</td>
 <td>13.8</td>
 <td>20.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Expectations</td>
 <td>-18.4</td>
 <td>6.6</td>
 <td>1.4</td>
 <td>-10.3</td>
 <td>-6.0</td>
 <td>2.6</td>
 <td>21.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Consumer Confidence By Age
 Group</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Under 35 Years</td>
 <td>-9.6</td>
 <td>3.7</td>
 <td>-0.4</td>
 <td>-4.5</td>
 <td>0.3</td>
 <td>2.7</td>
 <td>6.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Aged 35-54 Years</td>
 <td>-8.4</td>
 <td>6.4</td>
 <td>-2.3</td>
 <td>-2.6</td>
 <td>-1.1</td>
 <td>7.0</td>
 <td>16.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Over 55 Years</td>
 <td>-9.4</td>
 <td>-3.5</td>
 <td>6.0</td>
 <td>-4.1</td>
 <td>-1.9</td>
 <td>11.8</td>
 <td>33.5</td>
 </tr>
 </tbody>
 </table>
 
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The Conference Board's Index of Consumer Confidence declined 9.5% (-3.4% y/y) during March to a level of 120.0 following a 1.7% February gain, revised from 0.2%. A decline to an index level of 114.8 had been expected in the Action [...]

U.S. Consumer Confidence Declines Sharply in March as Expectations Erode

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&bull; Chicago PMI fell to 47.8 in March, the ninth consecutive month below 50 growth mark.

&bull; ISM-Adjusted measure calculated by Haver Analytics fell even more to 46.9.

&bull; Survey extended only to March 16; so it doesn't capture most of the coronavirus impact.


The Chicago Purchasing Managers Business Barometer fell to 47.8 in March from 49.0 in February. A reading below 50 for this diffusion index suggests contracting activity in the Chicago area. The Action Economics Forecast Survey expected a larger decline to 41.0, likely reflecting the adverse impact of the spreading coronavirus. However, the survey period ended on March 16. So, the March results don't capture the massive slowdown in economic activity that transpired over the second half of March.

Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with similar methodology to the ISM Composite Index. This measure fell to 46.9 in March from 50.8 in February. The February reading had been the first one above the key 50 mark in the previous eight months. The Chicago ISM-Adjusted index has a 78% correlation with the national ISM Manufacturing Index, which is scheduled for release tomorrow.

Of the five main indicators, production and new orders posted monthly declines and were well below the 50 mark. In contrast, supplier deliveries recorded a significant increase, moving even further above 50. Extended supplier deliveries are typically seen as indicating demand putting pressure on supply. However, in the current environment, they probably point to strained supply chains. The employment index edged up in March but remained well below 50, indicating that employment in the Chicago area was being challenged even before the big layoffs from the coronavirus that the economy experienced in the second half of March.

The MNI Chicago Report is produced by MNI in partnership with ISM-Chicago. The survey
covers a sample of over 200 purchasing professionals in the Chicago area with a monthly
response rate of about 50%. Summary data are contained in Haver's USECON database,
with detail including the ISM-style index in the SURVEYS database. The Action Economics
Forecast Survey is available in AS1REPNA.

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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" >Chicago Purchasing Managers Index (%,
 SA)</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Mar '19</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >General Business Barometer</td>
<td >47.8</td>
<td >49.0</td>
<td >42.9</td>
<td >57.2</td>
<td >51.3</td>
<td >62.4</td>
<td >60.8</td>
 </tr>
 <tr>
 <td class="firstcol" >ISM-Adjusted General Business Barometer</td>
<td >46.9</td>
<td >50.8</td>
<td >44.9</td>
<td >56.3</td>
<td >51.4</td>
<td >60.8</td>
<td >59.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Production</td>
<td >44.4</td>
<td >51.0</td>
<td >42.7</td>
<td >60.3</td>
<td >51.2</td>
<td >64.5</td>
<td >64.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; New Orders</td>
<td >45.2</td>
<td >49.1</td>
<td >41.5</td>
<td >58.0</td>
<td >52.0</td>
<td >63.8</td>
<td >63.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Order Backlogs</td>
<td >40.3</td>
<td >38.2</td>
<td >34.6</td>
<td >44.9</td>
<td >46.9</td>
<td >58.0</td>
<td >55.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Inventories</td>
<td >34.6</td>
<td >48.1</td>
<td >40.2</td>
<td >48.4</td>
<td >48.7</td>
<td >55.4</td>
<td >54.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Employment</td>
<td >44.9</td>
<td >44.5</td>
<td >47.0</td>
<td >54.1</td>
<td >49.6</td>
<td >55.3</td>
<td >52.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Supplier Deliveries</td>
<td >65.3</td>
<td >61.3</td>
<td >53.3</td>
<td >60.7</td>
<td >55.6</td>
<td >64.8</td>
<td >59.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Prices Paid</td>
<td >56.7</td>
<td >52.9</td>
<td >56.1</td>
<td >63.7</td>
<td >58.5</td>
<td >73.9</td>
<td >64.0</td>
 </tr>
 </tbody>
 </table>
 
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• Chicago PMI fell to 47.8 in March, the ninth consecutive month below 50 growth mark. • ISM-Adjusted measure calculated by Haver Analytics fell even more to 46.9. • Survey extended only to March 16; so it doesn't capture most of the [...]

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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Initial claims for unemployment insurance dropped 10,000 to 214,000 in the week of December 20, from 224,000 during the week of December 13. The four-week moving average of initial claims was 216,750, a decrease of 750 from the prior week’s unrevised 217,500.

Federal government employees initially filed 805 (NSA) jobless insurance claims in the week ended December 13, after filing 1091 claims in the week ended December 6.

Continuing claims for unemployment insurance rose 38,000 to 1.923 million in the week ending December 13, after rising 55,000 to 1.885 million, revised from 1.897 million in the week ending December 6. The four-week moving average was 1.894 million in the week ending December 13, down 5,250 from 1.899 million, revised from 1,902,000 in the week ending December 6. The insured unemployment rate stood at 1.3% in the week of December 13, up from 1.2% in the week of December 6.

Federal government employees’ continuing benefits claims were 12,887 (NSA) in the week ending December 6, from 14,077 (NSA) in the week of November 29. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 6, the highest unemployment rates were in New Jersey and Washington (both 2.40%), Massachusetts and Minnesota (both 2.10%), California and Rhode Island (both 2.00%). The lowest rates were in Florida (0.30%), and Alabama, Louisiana, North Carolina (all 0.40%). Rates in other notable states include New York (1.80%), Illinois and Pennsylvania (both 1.70%), and Texas (1.10%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.


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- Initial claims declined from the prior week.
- Continuing claims rose from the prior week.
- The insured unemployment rate edged up.


U.S. Initial Claims for Unemployment Insurance Dropped in Latest Week

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Mortgage applications dropped 5.0% w/w (+49.8% y/y) in the week of December 19, after a drop of 3.8% w/w (+40.9% y/y) in the week of December 12, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house fell 3.7% w/w (+15.9% y/y) in the latest week, the third consecutive weekly decline, following a drop of 2.8% w/w (+12.3% y/y) in the December 12 week. Applications for loan refinancing dropped 5.6% w/w (+110.1% y/y) in the December 19 week after a decline of 3.6% w/w (+86.0% y/y) in the week of December 12. 

The effective interest rate on a 30-year fixed-rate loan fell 8bps to 6.48% in the week ending December 19 from 6.56% in the week ending December 12. The rate on 15-year fixed-rate mortgages dropped 5bps to 5.86% in the latest week from 5.91% in the prior week. The 30-year Jumbo rate rose 8bps to 6.63% in the December 19 week from 6.55% in the December 12 week. The rate on a 5-year ARM jumped 20bps to 5.96% in the latest week from 5.76% in the December 12 week.

The share of applications for refinancing an existing loan edged up to 59.1% of total applications in the December19 week from 59.0% in the week ending December 12. The adjustable-rate mortgage (ARM) share of activity rose to 8.1% in the latest week from 7.2% in the December 12 week.

The average size of a mortgage loan edged down 0.1% w/w (+7.8% y/y) to $399,700 in the week ending December 19, following a rise of 1.5% w/w (6.4% y/y) to $400,000 in the December 12 week. The average size of a purchase loan rose 1.0% w/w (1.1% y/y) to $428,600 in the latest week, after rising 0.6% w/w (-0.3% y/y) to $424,200 in the prior week. The average size of a loan to refinance a mortgage declined 0.9% w/w (+24.9% y/y) to $379,700 in the December 19 week, following a rise of 2.3% w/w (19.8% y/y) to $383,300 in the week ending December 12.

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


- Both purchase applications and refinancing loan applications fell in the latest week.
- Effective interest rate on 30-year fixed loans fell to 6.48%.
- Average loan size edged down.


U.S. Mortgage Applications Dropped in the Week of December 19

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Real GDP grew 4.3% (SAAR) during the third quarter following a 3.8% Q2 gain, revised from 3.3% reported initially. These increases followed a minimally revised 0.6% decline in Q1. A 3.0% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.3% compared to 2.1% y/y in Q2 and remained below its most recent high of 3.4% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment surged 7.0% (4.2% y/y) last quarter after edging 0.6% higher in Q2. Before-tax earnings with IVA & CCA rose 4.2% (9.1% y/y) after improving 0.2% in Q2. Financial sector earnings rose 6.2% (21.1% y/y) after rising 1.1% in Q2. Nonfinancial corporate profits rose 2.5% (3.3% y/y) after edging 0.5% higher in Q2. Earnings from abroad jumped 10.6% (26.3% y/y) following a 2.9% Q2  decline.

Foreign trade balance improvement added 1.59 percentage points to growth last quarter after adding 4.83 percentage points in Q2. Real exports increased 2.1% (1.5% y/y) after falling 0.5% in Q2. Real imports declined 1.2% (-1.8% y/y) after declining 8.3% in Q2. Inventories subtracted 0.22 percentage points from growth after subtracting 3.44 percentage point from Q2 growth.

Real final sales to private domestic purchasers grew 3.0% (2.6% y/y) last quartter after rising 2.9% in Q2, revised from 1.6%. Personal consumption expenditures rose 3.5% (2.6% y/y) after a 2.5% rise, revised from 1.6%. Durable goods spending rose 1.6% (3.2% y/y) after increasing 2.3% in Q2. Motor vehicle purchases declined 6.7% (+1.6% y/y) after strengthening 9.7% in Q2. Spending on home furnishings & appliances weakened 4.2% (+0.7% y/y) following a 2.0% fall. Recreational goods & vehicle buying surged 15.7% (7.0% y/y) last quarter after falling 2.5% in Q2.

Nondurable goods outlays in constant dollars rose 3.9% (3.0% y/y) last quarter following 2.2% growth in Q2. Apparel spending strengthened 6.7% (7.0% y/y) following a 5.8% rise. Food & beverage buying gained 2.0% (1.3% y/y) after edging 0.2% higher. Gasoline & fuel oil purchases improved 1.3% (-0.2% y/y) after falling 2.8% in Q2.



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Real spending on services increased 3.7% (2.4% y/y) in Q3 after a 2.6% Q2 gain. Outlays on housing & utilities edged 0.3% higher (1.0% y/y) after easing 0.2% in Q2. Health care expenditures surged 6.8% (4.5% y/y) after a 4.8% increase. Transportation outlays gained 3.1% both  q/q and y/y after a 7.0% rise, while recreation spending jumped 6.6% (2.4% y/y) following a 3.9% rise. Restaurant & hotel expenditures increased 1.2% (2.0% y/y) after strengthening 5.9% in Q2. Financial services expenditures rose 2.6% both q/q and y/y following a 4.8% Q2 increase.

Business fixed investment in constant dollars increased 2.8% (3.9% y/y) last  quarter following a 7.3% Q2 rise, revised from 5.7%. Expenditures on structures declined 6.3% both q/q and y/y, after falling for six consecutive quarters. Expenditures on producers’ durable equipment increased 5.4% (7.4% y/y), after strengthening 8.5% in Q2. Outlays on information processing equipment rose 8.4% (18.6% y/y), after strengthening 11.7% during Q2. Industrial equipment investment rose 2.0% (3.4% y/y) after a 6.5% rise. Transportation equipment investment fell  2.7% (+3.0% y/y) after strengthening 25.2%. Intellectual property product spending rose 5.4% last quarter (6.4% y/y), after surging 15.0% in Q2.

Residential structures investment in real terms declined 5.1% (-1.8% y/y), the same as in Q2. It was the third consecutive quartly decline.

Government spending rose 2.2% (1.1% y/y) during the third quarter after an unrevised 0.1% easing in Q2. Federal government expenditures rose 2.9% (-1.0% y/y) after falling 5.3% in Q2. National defense expenditures increased 5.8% (1.0% y/y) after rising 0.9% in Q2. State & local government spending rose 1.8% (2.4% y/y) following a 3.1% rise.

The GDP chain price index rose 3.8% (3.0% y/y) last quarter vs. 2.1% in Q2. The PCE chain price index increased 2.8% (2.7% y/y) following a 2.1% rise. The PCE price index excluding food and energy rose 2.9% (2.9% y/y) after increasing 2.6% in Q2. The business fixed investment price index rose 5.2% (1.5% y/y) in Q3 after a 0.4% decline. The residential price index rose 4.5% (3.3% y/y) last quarter after a 2.2% rise, while the government price index increased 4.4% (3.5% y/y) following a 3.3% rise.

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



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- Consumer spending strengthens; growth in business investment decelerates.
- Corporate profit growth led by earnings abroad.
- Rise in chain price index accelerates.


U.S. GDP Growth is Strong in Q3; Profits Jump

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Industrial production fell 0.1% m/m in October but rose 0.2% m/m (2.5% y/y) in November. The Action Economics Forecast Survey expected 0.1% monthly gains in both months. Manufacturing activity was tepid with manufacturing production falling 0.4% m/m in October and unchanged in November. Manufacturing output has not posted a monthly gain since July. Mining output fell 0.8% m/m in October but rebounded 1.7% m/m in November. Utilities output surged 2.6% m/m in October but fell 0.4% m/m in November. Compared to a year ago, manufacturing production is up 1.9%; mining output is up 3.9%; and utilities output is up 4.8%.

By market group, output of durable consumer goods plunged 2.6% m/m in October and fell another 0.2% in November. Production of durable consumer goods has declined in five of the previous six months. Production of nondurable consumer goods rose 0.5% m/m in both October and November. Compared to a year ago, durable consumer goods production has fallen 5.9% while nondurable consumer goods output has risen 2.7%. Business equipment production fell 0.3% m/m in October but rebounded 0.3% m/m in November and is up 11.2% y/y. Production of nonindustrial supplies fell 0.3% m/m in both October and November.

By industry group, output of durable goods fell 0.5% m/m in October and declined 0.1% m/m in November but were up 3.2% from a year ago. Motor vehicle and parts production slumped 5.1% m/m in October and declined 1.0% m/m in November to be down 5.6% from a year ago. Monthly motor vehicle output has declined in five of the previous six months. In contrast, production of computers and electronic products increased 1.5% m/m in October and rose 0.8% m/m in November. Aerospace production continued to rise, increasing 2.0% m/m in October and 1.1% m/m in November to be up 25.2% from a year ago. Output of nondurable goods fell 0.2% m/m in October and edged up 0.1% m/m in November. Their output is up 0.9% from a year ago. Apparel output fell 1.3% m/m in October but recovered in November, rising 2.3% m/m. Food and beverage output rose 0.3% m/m in October and another 1.2% in November.

Output of selected high-technology industries rebounded in October and November. After having declined 1.0% m/m in both August and September, production jumped 1.9% m/m in October and 1.1% m/m in November to stand 11.8% higher than a year ago. Manufacturing output excluding selected high-tech industries fell 0.4% m/m in October and was unchanged in November. It has risen only 1.6% over the past year. Manufacturing excluding motor vehicle production was unchanged in October and edged up 0.1% m/m in November; it is up 2.6% y/y.

Total industry capacity utilization edged down to 75.9% in October from 76.0% in September and then recovered the decline in November, edging up to 76.0%. In the manufacturing sector, the utilization rate slumped to 75.4% in October from 75.8% in September and remained at 75.4% in November. The October/November reading is the lowest since January.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- Today’s release contained figures for both October and November that had been delayed by the federal government shutdown.
- IP fell in October but recovered in November.
- Manufacturing output was tepid, falling in October and unchanged in November.
- A surge in utilities output in October prevented a larger decline in total production.
- A jump in mining output in November accounted for all of the increase in total production.


U.S. Industrial Production Fell in October and Recovered in November

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New orders for durable goods fell a more-than-expected 2.2% (+4.8% y/y) in October following an upwardly revised 0.7% m/m rise in September (previously +0.5% m/m) and a 3.0% monthly jump in August. The Action Economics Forecast Survey expected a 1.5% m/m decline. A 23.7% m/m drop in aircraft orders more than accounted for the overall decline. Orders excluding aircraft increased 0.2% m/m (4.0% y/y) in October on top of a 0.5% monthly increase in September.

More generally, transportation orders fell 6.5% m/m (+7.3% y/y) in October following a 0.6% m/m increase in September and an 8.0% monthly jump in August. In addition to the drop in aircraft orders, orders for motor vehicles and parts edged up 0.1% m/m in October, their sixth consecutive monthly increase. Across other sectors, orders for primary metals fell 0.7% m/m, their first monthly decline in ten months. Orders for electrical equipment and appliances slumped 1.5% m/m, their first monthly decline in seven months. In contrast, orders for fabricated metal products rose 0.5% m/m, their fourth consecutive monthly gain. Machinery orders increased 0.8% m/m, their eighth consecutive monthly rise. Orders for computers and electronic products increased a solid 1.0% m/m on top of a 1.2% monthly increase in September.

Shipments of core capital goods (nondefense capital goods shipments excluding aircraft) are a reliable coincident indicator of business spending on equipment in the national accounts. They rose 0.7% m/m in October following an upwardly revised 1.2% monthly gain in September (previously +0.9%). The was the second consecutive monthly increase and the fifth in the past six months. The strong end to Q3 and the continued rise in the first month of Q4 provides a solid starting point for all of Q4. The October shipments figure was 5.9% at an annual rate above the Q3 average. Core capital goods orders rose 0.5% m/m in October on top of an upwardly revised 1.1% m/m increase in September (previously +0.9%). This was the fourth consecutive monthly rise.

Total manufacturing shipments edged up 0.1% m/m (+2.8% y/y) in October after having been essentially unchanged in September. Shipments of durable goods increased 0.6% m/m (5.9% y/y), led by 1.4% monthly jump in transportation shipments. However, apart from a 0.1% m/m decline in shipments of other durable goods, all of the other major sectors posted monthly gains in October. In contrast, shipments of nondurable goods fell 0.4% m/m (-0.3% y/y) in October for their third consecutive monthly decline. The monthly decline was led by a 2.4% m/m fall in shipments of petroleum and coal products although it was relatively widely spread across major sectors. The one exception was a 2.1% m/m increase in leather product shipments, but this came after four consecutive sizeable monthly declines.

Unfilled durable goods orders increased 0.2% m/m (7.9% y/y) in October for their third consecutive monthly gain following a 0.8% m/m rise in September and a 0.7% m/m increase in August. Total factory inventories were unchanged in October (+1.4% y/y) following 0.1% monthly declines in both August and September. Durable goods inventories edged up 0.1% m/m in October while inventories of nondurable goods fell 0.2% m/m, the third consecutive monthly decline.

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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- New orders for durable goods slumped 2.2% m/m in October following increases in both August and September
- A 24% monthly drop in aircraft orders drove the overall decline
- Orders excluding aircraft rose 0.2% m/m in October
- Core capital goods shipments and orders continued to rise in October with small upward revisions to September


Economy in Brief: 2020

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