Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080409a.jpg" align="left" border="0" height="265" width="353">
The Bureau of Labor Statistics reported in the Job Openings
&amp; Labor Turnover Survey (JOLTS) that for February, the job
openings rate was unchanged from the prior month at 2.7%. The 2008
figures continued down from 2007 and from 2006. The job
openings rate is the number of job openings on the last business day of
the month as a percent of total employment plus job openings.
The actual number of total job openings fell 1.8% m/m to 3.820 million and the number of
job openings was down 8.3% from February 2007. Openings in
the construction industry were down 40.9% from a year ago and job
opening in manufacturing were off 27.9%. Professional &amp;
business services job openings were up 10.8% as were job openings in
the education &amp; health sectors by 9.4%
By region, openings in the Northeast were down 14.4% y/y and
they were down 7.9% in the South. Openings were down 5.7% in the
Midwest and by 4.3% in the West.
The hires rate was stable m/m at 3.4% but remained below the
levels of the last several years. The hires rate is the
number of hires during the month divided by employment.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080409b.jpg" align="right" border="0" height="265" width="353">
The actual number of hires also was stable m/m at 4.638
million but declined by 3.4% y/y. Hires declined by 2.4% during all of
2007.
The job separations rate ticked up to 3.3% during February but
it was stable versus a year ago. Separations include quits,
layoffs, discharges, and other separations as well as retirements. The
level of job separations fell 0.9% y/y.
The JOLTS survey dates only to December 2000 but has since
followed the movement in nonfarm payrolls, though the actual
correlation between the two series is low.
A description of the Jolts survey and the latest release from
the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.
The minutes to the latest meeting of the Federal
Open Market Committee can be found <a href="http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20080318.pdf">
here</a>
Today's speech by Federal Reserve Chairman Ben S. Bernanke
titled The Importance of Financial Education and the National
Jump Start Coalition Survey are available <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20080409a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a>
(Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Job Openings, Total&nbsp;&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.7</td>
<td>2.7</td>
<td>2.9</td>
<td>2.8</td>
<td>3.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>3,820</td>
<td>3,889</td>
<td>4,168</td>
<td>3,974</td>
<td>4,272</td>
<td>3,863</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total </td>
<td>&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.4</td>
<td>3.4</td>
<td>3.5</td>
<td>41.9</td>
<td>43.4</td>
<td>43.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,638</td>
<td>4,639</td>
<td>4,800</td>
<td>57,771</td>
<td>59,153</td>
<td>57,501</td>
</tr>
</tbody>
</table>
U.S. Pending Home Sales Fell As
Expected in February 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 9, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080409c.jpg" align="left" border="0" height="265" width="353">
For February, the National Association of Realtors reported
that the level of pending sales of existing homes fell 1.9% after
having been roughly unchanged in January. The latest reading was as
expected and it was down 11.6% from the average sales level in 2007.
These figures are analogous to the new home sales data from
the Commerce Department in that they measure existing home sales when
the sales contract is signed, not at the time the sale is closed.
On a running basis three month basis, the rate of decline in
home sales eased somewhat to -10.2% (AR) from the worst rate of decline
of over 40% last summer. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080409d.jpg" align="right" border="0" height="265" width="353">
Sales in the West actually have risen 20.7% from their low
last August and the three month rate of change through February soared
to 62.9%.
That improvement, however, was countered by a sharp
deterioration in sales in the South where the three month change in
sales fell to a negative 42.7%.
Despite a 3.7% decline in February sales in the Midwest, on a
three month basis sales have stabilized and show a slight increase. In
the Northeast sales rose 3.2% last month but the three month change
remained quite negative at -11.4%.
The Realtors also indicated in an earlier report that the
number of homes on the market and available for sale fell 3.0% (+6.0%
y/y) in February. At the current sales rate there were 9.6 months of
homes on the market versus an 8.9 months average during all of last
year.
The pending home sales data are available in Haver's PREALTOR
database and the number of homes on the market are in the REALTOR
database.
Energy and the Economy from the Federal
Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20080401/netpub.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Pending
Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>84.6</td>
<td>&nbsp;86.2</td>
<td>&nbsp;&nbsp; -21.4%</td>
<td>95.7</td>
<td>112.1&nbsp;</td>
<td>124.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>71.8</td>
<td>69.6</td>
<td>-25.4</td>
<td>85.6</td>
<td>98.5</td>
<td>108.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>82.7</td>
<td>85.9</td>
<td>-17.4</td>
<td>89.6</td>
<td>102.0</td>
<td>116.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>85.0</td>
<td>89.9</td>
<td>-30.3</td>
<td>107.3</td>
<td>127.3</td>
<td>134.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>95.8</td>
<td>93.8</td>
<td>-6.2</td>
<td>92.3</td>
<td>109.5</td>
<td>128.6</td>
</tr>
</tbody>
</table>
German Trade Picture Produces
aHigher Surplus on Weak Imports 
by <a href="/comment/Brusca.html">Robert
Brusca</a> April 9, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080409f.jpg" align="left" border="0" height="265" width="353">
The German trade picture shows a month-to-month slowing
imports and flat exports. The slowdown in both the flows may be just
monthly volatility or something more ominous. So far Europeans have
remained up beat on their economic outlook even as the US economy has
slipped. The OECD has held its forecast for 2008 growth for Germany
above 2% while the fresh IMF forecast du jour (in fact, of today) cuts
German growth by just 0.1% from the IMF&#8217;s last guess in January,
bringing it to a pace of 1.4%.
The growth rates for exports and imports may be a bit
misleading in the table, due to recent volatility.
As the chart shows, both exports and imports accelerated from a
September low for imports and a November low for exports. Both series
have since topped out and growth rates have declined. The trade surplus
plunged in December from a high in November but has since begun to edge
higher as the pace of both exports and imports has cooled.
In the recent three-month period German imports of capital
goods have been surging while German capital goods exports have
remained subdued. Capital goods have been the lifeblood of the German
economy. Domestically, consumption has just not kicked up. Consumer
goods imports are holding steady at around a 6% growth rate while
exports of consumer goods have been 20% to 25% over the recent year to
three months in terms of annualized rates of growth. For the moment
German trade flows appear to be slowing.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="6" scope="col"> German
Trade Trends for Goods</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td> Feb-08</td>
<td> Jan-08</td>
<td> 3M</td>
<td> 6M</td>
<td> 12M</td>
</tr>
<tr>
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; 16.37</td>
<td>&#8364;&#8364; 16.10</td>
<td>&#8364;&#8364; 16.09</td>
<td>&#8364;&#8364; 17.48</td>
<td>&#8364;&#8364; 16.83</td>
</tr>
<tr class="grey1">
<td class="firstcol"> EXPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Exports</td>
<td>0.0%</td>
<td>3.6%</td>
<td> 9.3%</td>
<td>6.6%</td>
<td>6.7%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>&nbsp;--</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td> 3.0%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>&nbsp;--</td>
<td>-0.3%</td>
<td>0.8%</td>
<td> -1.0%</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>&nbsp;--</td>
<td>10.3%</td>
<td>23.7%</td>
<td> 25.6%</td>
<td>18.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol"> IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Imports</td>
<td>-0.4%</td>
<td>4.0%</td>
<td> 41.9%</td>
<td> 6.1%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>&nbsp;--</td>
<td>5.7%</td>
<td>11.4%</td>
<td> 13.5%</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>&nbsp;--</td>
<td>12.0%</td>
<td>-6.3%</td>
<td> 18.3%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>&nbsp;--</td>
<td>3.5%</td>
<td>6.5%</td>
<td> 4.7%</td>
<td>6.6%</td>
</tr>
<tr class="odd">
<td colspan="6" class="firstcol">*Bil.Euros;
mo or period
average; Shaded area trends lag one month</td>
</tr>
</tbody>
</table>
UK Output: Suddenly on the Mend 
by <a href="/comment/Brusca.html">Robert
Brusca</a> April 9, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080409e.jpg" align="left" border="0" height="265" width="353">
The sequential growth rates for January tell the story
compared to their February counterparts: In January year/eayr output
growth was 0.7% sliding to an annual rate of 0.6% over six months and
to a pace of 0.4% over three months. UK MFG was slow and slowing. Now
in February year-over-year growth is 2%, six-month growth still slows,
but to 1%, and three-month growth is a solid rebound at 2.7%. Consumer
durables are a big reason for the shift with a three-month growth rate
up to 19.7% saar. Intermediate
goods output is still declining over three months but capital goods
output is up a strong 4.8% after being flat over three months in
January. The detail shows that much of that rebound is in the volatile
auto sector.
Still there is a clear sign of progress. The chart on the left
demonstrates that a falling growth pattern has been arrested and
features a fledgling upturn of some strength. It may be that the
weakness in the pound sterling has something to do with this
re-vitalization. Domestic UK spending patterns have not been so strong
and confidence continues to slip. If the recovery in output is for
real, and not just an artifact of monthly volatility, it is probably
the exchange rate at work.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">UK IP and
MFG </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Feb 
08</td>
<td>Jan 
08</td>
<td>Feb 
08</td>
<td>Jan 
08</td>
<td>Feb 
08</td>
<td>Jan 
08</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">UK MFG</td>
<td>Feb 
08</td>
<td>Jan 
08</td>
<td>Dec 
07</td>
<td>3Mo</td>
<td>3-Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>0.4%</td>
<td>0.5%</td>
<td>-0.2%</td>
<td>2.7%</td>
<td>0.4%</td>
<td>1.0%</td>
<td>0.6%</td>
<td>2.0%</td>
<td>0.7%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">Consumer</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Durables</td>
<td>2.3%</td>
<td>-0.3%</td>
<td>2.5%</td>
<td>19.7%</td>
<td>3.1%</td>
<td>-1.8%</td>
<td>-5.0%</td>
<td>2.3%</td>
<td>-1.1%</td>
<td>10.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nondurables</td>
<td>0.3%</td>
<td>0.3%</td>
<td>-0.5%</td>
<td>0.4%</td>
<td>-1.2%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>0.5%</td>
<td>-1.3%</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>-0.1%</td>
<td>-2.5%</td>
<td>-3.7%</td>
<td>-0.8%</td>
<td>-1.1%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>-3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>0.5%</td>
<td>0.1%</td>
<td>0.5%</td>
<td>4.8%</td>
<td>0.0%</td>
<td>3.5%</td>
<td>2.4%</td>
<td>3.6%</td>
<td>2.2%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Memo: Detail</td>
<td>1Mo%</td>
<td>1Mo%</td>
<td>1Mo%</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-4 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Food Drink &amp; Tobacco</td>
<td>0.6%</td>
<td>0.4%</td>
<td>-0.5%</td>
<td>2.0%</td>
<td>0.4%</td>
<td>0.8%</td>
<td>-0.8%</td>
<td>0.1%</td>
<td>-1.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Textile &amp; Leather</td>
<td>1.3%</td>
<td>-0.2%</td>
<td>0.3%</td>
<td>5.7%</td>
<td>-7.1%</td>
<td>-6.3%</td>
<td>-6.2%</td>
<td>2.6%</td>
<td>0.3%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Vehicles &amp; Trailer</td>
<td>2.4%</td>
<td>1.7%</td>
<td>1.7%</td>
<td>19.9%</td>
<td>-3.0%</td>
<td>2.3%</td>
<td>2.3%</td>
<td>2.3%</td>
<td>5.6%</td>
<td>5.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Mining and Quarrying</td>
<td>-1.2%</td>
<td>-4.4%</td>
<td>1.3%</td>
<td>-16.1%</td>
<td>-20.7%</td>
<td>-10.8%</td>
<td>-11.2%</td>
<td>-6.4%</td>
<td>-3.6%</td>
<td>-21.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Electricity, Gas &amp; Water</td>
<td>0.7%</td>
<td>-1.7%</td>
<td>0.8%</td>
<td>-0.8%</td>
<td>-5.0%</td>
<td>6.3%</td>
<td>3.1%</td>
<td>2.8%</td>
<td>0.9%</td>
<td>-4.4%</td>
</tr>
</tbody>
</table>
</body></html>

The Bureau of Labor Statistics reported in the Job Openings & Labor Turnover Survey (JOLTS) that for February, the job openings rate was unchanged from the prior month at 2.7%. The 2008 figures continued down from 2007 and from 2006. [...]

JOLTS: Job Openings & Hire Rates Still in Decline

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408h.jpg" align="left" border="0" height="265" width="353">
According to the National Federation of Independent Business
(NFIB), small business optimism during March fell to the lowest level
since 1980. The 3.6% m/m decline to a reading of 89.6 followed a modest
1.2% February rise. The drop lowered the level of sentiment 7.3% below
the 2007 average and it was the lowest level since the short, "credit
crunch" recession of 1980.
During the last ten years there has been a 70% correlation
between the level of the NFIB index and the two quarter change in real
GDP.
Seven percent of firms indicated that credit was harder to
get. That was near the highs of the last several months and it was more
than double the percentage during 2004.
Twenty three percent fewer respondents in March expected the
economy to improve and only three percent of the respondents expected
to raise employment. That was the least since 2003. During the last ten
years there has been a 72% correlation between the NFIB employment
percentage and the y/y change in nonfarm payrolls.
Only five percent of respondents thought that now was a good
time to expand the business, the least since 1982, and expectations for
earnings fell to the lowest level since 1982.
The percentage of firms actually raising
prices rose m/m to 18% which was the highest level since July of 2007.
During the last ten years there has been a 60% correlation between the
change in the producer price index and the level of the NFIB price
index. The percentage of firms planning to raise
prices also rose to 29%, its highest since August 2006. 

About 24 million businesses exist in the United States. Small
business creates 80% of all new jobs in America.
The NFIB figures can be found in Haver's SURVEYS
database.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408j.jpg" border="0" height="265" width="312">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408i.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index
(1986=100)</td>
<td>89.6</td>
<td>92.9</td>
<td>-7.9%</td>
<td>96.7</td>
<td>98.9</td>
<td>101.6</td>
</tr>
</tbody>
</table>
</body></html>

According to the National Federation of Independent Business (NFIB), small business optimism during March fell to the lowest level since 1980. The 3.6% m/m decline to a reading of 89.6 followed a modest 1.2% February rise. The drop [...]

U.S. Small Business Optimism Lowest Since 1980

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408h.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408f.jpg" border="0" height="265" width="312">
Economy watchers in Japan are people who hold jobs that enable
them to gauge present conditions and future prospects in their
respective lines of business. Since 2001, there have been some 2050
watchers reporting to the Cabinet Office. The Cabinet Office presents
the results of the surveys in the form of diffusion indexes.
The Economy Watchers diffusion index for current conditions
rose for the second month reaching 36.9 in March from 33.6 in February
and 31.8 in January. The diffusion index for future conditions,
however, <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408g.jpg" align="left" border="0" height="265" width="353">
fell in March to 38.2, after showing the first rise in 9
months in February. The indexes of both current and future conditions
can be seen in the first chart.
Expectations of lower future conditions were registered in
every category except for retail sales where the diffusion index rose
by a tenth of a percentage point. There are close correlations among
the diffusion indexes of the various categories relating to current and
future conditions. For example, the correlation between the indexes of
future conditions for households and corporations is .94, as seen in
the second chart. Similar high correlations are present in other
combinations which suggests that all the Economy Watchers in the
various lines of business have similar appraisals of current and future
conditions.
As an indicator of trends in the whole economy, the Economy
Watchers diffusion index of future conditions does not appear to be a
particularly good forecaster. The final chart shows the quarterly
changes in the diffusion index of future conditions and in GDP and the
correlation (R) between the two series. The R2
which measures the degree to which the change in the GDP is accounted
for by the change in the diffusion index is only 12%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">JAPAN:&nbsp;
ECONOMY WATCHERS SURVEY (Diffusion Indexes)&nbsp;</th>
<th scope="col">Mar 08</th>
<th scope="col">Feb&nbsp; 08&nbsp;</th>
<th scope="col">Mar 07&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="9" class="firstcol">Current Conditions</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total
&nbsp;</td>
<td>36.9</td>
<td>33.6</td>
<td>50.8</td>
<td>9.87</td>
<td>-27.36</td>
<td>44.9</td>
<td>51.4</td>
<td>50.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Households&nbsp;</td>
<td>37.4</td>
<td>33.1</td>
<td>79.9</td>
<td>12.99</td>
<td>-25.05</td>
<td>44.0</td>
<td>49.8</td>
<td>49.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Corporations</td>
<td>36.0</td>
<td>34.4</td>
<td>50.7</td>
<td>4.65</td>
<td>-29.27</td>
<td>45.1</td>
<td>51.8</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Manufacturing&nbsp;</td>
<td>35.5</td>
<td>34.5</td>
<td>48.7</td>
<td>2.90</td>
<td>-27.10</td>
<td>44.6</td>
<td>50.1</td>
<td>48.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Non Manufacturing</td>
<td>36.2</td>
<td>34.3</td>
<td>52.7</td>
<td>5.54</td>
<td>-31.31</td>
<td>45.4</td>
<td>53.6</td>
<td>52.2</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">Future Conditions</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total
&nbsp;</td>
<td>38.2</td>
<td>39.5</td>
<td>51.3</td>
<td>-3.29</td>
<td>-25.54</td>
<td>46.9</td>
<td>52.9</td>
<td>51.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Households&nbsp;</td>
<td>38.8</td>
<td>39.6</td>
<td>51.6</td>
<td>-2.02</td>
<td>-24.81</td>
<td>46.6</td>
<td>52.5</td>
<td>50.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Corporations</td>
<td>36.1</td>
<td>38.6</td>
<td>47.9</td>
<td>-6.48</td>
<td>-24.63</td>
<td>45.8</td>
<td>51.7</td>
<td>50.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Manufacturing&nbsp;</td>
<td>36.8</td>
<td>39.6</td>
<td>47.2</td>
<td>-7.07</td>
<td>-22.03</td>
<td>45.2</td>
<td>50.6</td>
<td>49.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Non Manufacturing</td>
<td>35.2</td>
<td>37.4</td>
<td>48.6</td>
<td>-5.88</td>
<td>-27.57</td>
<td>46.4</td>
<td>52.9</td>
<td>52.1</td>
</tr>
</tbody>
</table>
</body></html>

Economy watchers in Japan are people who hold jobs that enable them to gauge present conditions and future prospects in their respective lines of business. Since 2001, there have been some 2050 watchers reporting to the Cabinet [...]

Japanese Economy Watchers See Improvement In Current Conditions, But Deterioration In Future Conditions

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Consumer credit outstanding rose $5.1B during February,
roughly half the gain posted for January.
The weak rise lowered three month growth in credit to 2.8%
(AR) which, due to slower growth in consumer spending, was half the
rate of gain during all of last year.
Growth in revolving credit slowed only somewhat m/m to $4.7B
but three month growth halved from its November high to 5.4% (AR).
The gain in non-revolving credit, which accounts for nearly
two thirds of total consumer credit, grew just $0.5B and the three
month growth rate dropped to 1.3% (AR) versus a high of 8.1% last
September.
These figures are the major input to the Fed's Flow of Funds
accounts for the household sector, released quarterly.
The Recession Dating Procedure from the
National Bureau of Economic Research (NBER) can be found <a href="http://www.nber.org/cycles/recessions.html">here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408c.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408d.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit (m/m Chg, SAAR)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$5.1B</td>
<td>&nbsp;$10.3B</td>
<td>5.8%</td>
<td>5.7%</td>
<td>4.5%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$4.7B</td>
<td>$5.6B</td>
<td>8.2%</td>
<td>7.5%</td>
<td>6.1%</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$0.5B</td>
<td>$4.8B</td>
<td>4.4%</td>
<td>4.7%</td>
<td>3.6%</td>
<td>4.9%</td>
</tr>
</tbody>
</table>
</body></html>

Consumer credit outstanding rose $5.1B during February, roughly half the gain posted for January. The weak rise lowered three month growth in credit to 2.8% (AR) which, due to slower growth in consumer spending, was half the rate of [...]

U.S. Consumer Credit Growth Eased in February

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408a.jpg" align="left" border="0" height="265" width="353">
According to the International Council of Shopping Centers
ICSC-UBS Chain Store survey, sales rose 0.7% last week and recovered
the declines of the prior two weeks. The increase left the opening
level of sales this month 0.5% higher than the March average which was
unchanged from February.
&gt;During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408b.jpg" align="right" border="0" height="265" width="353">
The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the latest week the leading indicator of chain store
sales from ICSC-UBS plunged 1.8% last week to the lowest level since
early 2002.
Higher prices for gasoline prices are just one factor
dampening any rise in store sales. The four cent rise last week lifted
the retail price for a gallon of regular to $3.32, up 28 cents or 9.1%
this year.
Global Economic and Financial Challenges:
Implications for Latin America is yesterday's speech by Fed
Governor Randall S. Kroszner and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/kroszner20080404a.htm">
here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">04/04/08</th>
<th scope="col">03/28/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>490.8</td>
<td>487.5</td>
<td>0.3%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>04/07/08</td>
<td>3/31/08</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Gasoline ($
per gallon)</td>
<td>3.32</td>
<td>3.29</td>
<td>18.9%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
</tbody>
</table>
</body></html>

According to the International Council of Shopping Centers ICSC-UBS Chain Store survey, sales rose 0.7% last week and recovered the declines of the prior two weeks. The increase left the opening level of sales this month 0.5% higher [...]

U.S. Chain Store Sales Rise Moderate, Gas Prices Rise Strong

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408a.jpg" align="left" border="0" height="265" width="353">
According to the International Council of Shopping Centers
ICSC-UBS Chain Store survey, sales rose 0.7% last week and recovered
the declines of the prior two weeks. The increase left the opening
level of sales this month 0.5% higher than the March average which was
unchanged from February.
&gt;During the last ten years there has been a 45%
correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408b.jpg" align="right" border="0" height="265" width="353">
The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the latest week the leading indicator of chain store
sales from ICSC-UBS plunged 1.8% last week to the lowest level since
early 2002.
Higher prices for gasoline prices are just one factor
dampening any rise in store sales. The four cent rise last week lifted
the retail price for a gallon of regular to $3.32, up 28 cents or 9.1%
this year.
Global Economic and Financial Challenges:
Implications for Latin America is yesterday's speech by Fed
Governor Randall S. Kroszner and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/kroszner20080404a.htm">
here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">04/04/08</th>
<th scope="col">03/28/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>490.8</td>
<td>487.5</td>
<td>0.3%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>04/07/08</td>
<td>3/31/08</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Gasoline ($
per gallon)</td>
<td>3.32</td>
<td>3.29</td>
<td>18.9%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
</tbody>
</table>

U.S. Consumer Credit Growth Eased
in February 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 8, 2008


Consumer credit outstanding rose $5.1B during February,
roughly half the gain posted for January.
The weak rise lowered three month growth in credit to 2.8%
(AR) which, due to slower growth in consumer spending, was half the
rate of gain during all of last year.
Growth in revolving credit slowed only somewhat m/m to $4.7B
but three month growth halved from its November high to 5.4% (AR).
The gain in non-revolving credit, which accounts for nearly
two thirds of total consumer credit, grew just $0.5B and the three
month growth rate dropped to 1.3% (AR) versus a high of 8.1% last
September.
These figures are the major input to the Fed's Flow of Funds
accounts for the household sector, released quarterly.
The Recession Dating Procedure from the
National Bureau of Economic Research (NBER) can be found <a href="http://www.nber.org/cycles/recessions.html">here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408c.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408d.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit (m/m Chg, SAAR)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$5.1B</td>
<td>&nbsp;$10.3B</td>
<td>5.8%</td>
<td>5.7%</td>
<td>4.5%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$4.7B</td>
<td>$5.6B</td>
<td>8.2%</td>
<td>7.5%</td>
<td>6.1%</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$0.5B</td>
<td>$4.8B</td>
<td>4.4%</td>
<td>4.7%</td>
<td>3.6%</td>
<td>4.9%</td>
</tr>
</tbody>
</table>

Japanese Economy Watchers See
Improvement In Current Conditions, But Deterioration In Future
Conditions 
by <a href="/comment/Curley.html">Louise
Curley</a> April 8, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408h.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408f.jpg" border="0" height="265" width="312">
Economy watchers in Japan are people who hold jobs that enable
them to gauge present conditions and future prospects in their
respective lines of business. Since 2001, there have been some 2050
watchers reporting to the Cabinet Office. The Cabinet Office presents
the results of the surveys in the form of diffusion indexes.
The Economy Watchers diffusion index for current conditions
rose for the second month reaching 36.9 in March from 33.6 in February
and 31.8 in January. The diffusion index for future conditions,
however, <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408g.jpg" align="left" border="0" height="265" width="353">
fell in March to 38.2, after showing the first rise in 9
months in February. The indexes of both current and future conditions
can be seen in the first chart.
Expectations of lower future conditions were registered in
every category except for retail sales where the diffusion index rose
by a tenth of a percentage point. There are close correlations among
the diffusion indexes of the various categories relating to current and
future conditions. For example, the correlation between the indexes of
future conditions for households and corporations is .94, as seen in
the second chart. Similar high correlations are present in other
combinations which suggests that all the Economy Watchers in the
various lines of business have similar appraisals of current and future
conditions.
As an indicator of trends in the whole economy, the Economy
Watchers diffusion index of future conditions does not appear to be a
particularly good forecaster. The final chart shows the quarterly
changes in the diffusion index of future conditions and in GDP and the
correlation (R) between the two series. The R2
which measures the degree to which the change in the GDP is accounted
for by the change in the diffusion index is only 12%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">JAPAN:&nbsp;
ECONOMY WATCHERS SURVEY (Diffusion Indexes)&nbsp;</th>
<th scope="col">Mar 08</th>
<th scope="col">Feb&nbsp; 08&nbsp;</th>
<th scope="col">Mar 07&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="9" class="firstcol">Current
Conditions</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total
&nbsp;</td>
<td>36.9</td>
<td>33.6</td>
<td>50.8</td>
<td>9.87</td>
<td>-27.36</td>
<td>44.9</td>
<td>51.4</td>
<td>50.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Households&nbsp;</td>
<td>37.4</td>
<td>33.1</td>
<td>79.9</td>
<td>12.99</td>
<td>-25.05</td>
<td>44.0</td>
<td>49.8</td>
<td>49.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Corporations</td>
<td>36.0</td>
<td>34.4</td>
<td>50.7</td>
<td>4.65</td>
<td>-29.27</td>
<td>45.1</td>
<td>51.8</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Manufacturing&nbsp;</td>
<td>35.5</td>
<td>34.5</td>
<td>48.7</td>
<td>2.90</td>
<td>-27.10</td>
<td>44.6</td>
<td>50.1</td>
<td>48.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Non Manufacturing</td>
<td>36.2</td>
<td>34.3</td>
<td>52.7</td>
<td>5.54</td>
<td>-31.31</td>
<td>45.4</td>
<td>53.6</td>
<td>52.2</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">Future
Conditions</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total
&nbsp;</td>
<td>38.2</td>
<td>39.5</td>
<td>51.3</td>
<td>-3.29</td>
<td>-25.54</td>
<td>46.9</td>
<td>52.9</td>
<td>51.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Households&nbsp;</td>
<td>38.8</td>
<td>39.6</td>
<td>51.6</td>
<td>-2.02</td>
<td>-24.81</td>
<td>46.6</td>
<td>52.5</td>
<td>50.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Corporations</td>
<td>36.1</td>
<td>38.6</td>
<td>47.9</td>
<td>-6.48</td>
<td>-24.63</td>
<td>45.8</td>
<td>51.7</td>
<td>50.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Manufacturing&nbsp;</td>
<td>36.8</td>
<td>39.6</td>
<td>47.2</td>
<td>-7.07</td>
<td>-22.03</td>
<td>45.2</td>
<td>50.6</td>
<td>49.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Non Manufacturing</td>
<td>35.2</td>
<td>37.4</td>
<td>48.6</td>
<td>-5.88</td>
<td>-27.57</td>
<td>46.4</td>
<td>52.9</td>
<td>52.1</td>
</tr>
</tbody>
</table>
U.S. Small Business Optimism
Lowest Since 1980 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 8, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408h.jpg" align="left" border="0" height="265" width="353">
According to the National Federation of Independent Business
(NFIB), small business optimism during March fell to the lowest level
since 1980. The 3.6% m/m decline to a reading of 89.6 followed a modest
1.2% February rise. The drop lowered the level of sentiment 7.3% below
the 2007 average and it was the lowest level since the short, "credit
crunch" recession of 1980.
During the last ten years there has been a 70% correlation
between the level of the NFIB index and the two quarter change in real
GDP.
Seven percent of firms indicated that credit was harder to
get. That was near the highs of the last several months and it was more
than double the percentage during 2004.
Twenty three percent fewer respondents in March expected the
economy to improve and only three percent of the respondents expected
to raise employment. That was the least since 2003. During the last ten
years there has been a 72% correlation between the NFIB employment
percentage and the y/y change in nonfarm payrolls.
Only five percent of respondents thought that now was a good
time to expand the business, the least since 1982, and expectations for
earnings fell to the lowest level since 1982.
The percentage of firms actually raising
prices rose m/m to 18% which was the highest level since July of 2007.
During the last ten years there has been a 60% correlation between the
change in the producer price index and the level of the NFIB price
index. The percentage of firms planning to raise
prices also rose to 29%, its highest since August 2006. 

About 24 million businesses exist in the United States. Small
business creates 80% of all new jobs in America.
The NFIB figures can be found in Haver's SURVEYS
database.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408j.jpg" border="0" height="265" width="312">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080408i.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index
(1986=100)</td>
<td>89.6</td>
<td>92.9</td>
<td>-7.9%</td>
<td>96.7</td>
<td>98.9</td>
<td>101.6</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Chain Store Sales RiseModerate, Gas Prices Rise Strong

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407b.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407c.jpg" border="0" height="265" width="312">

The latest three month's employment data show that hiring
momentum has turned negative. The 0.7% annual rate of decline in
nonfarm payrolls through March is down from positive growth of 1.1%
last year and of 1.8% during 2006. Is a recession indicated? The latest
numbers hardly measure up to those at the depths of the last two
recessions. But they are indicative of the downward momentum at the
start of the 2001 and the 1990 downturns.
With the measure showing that total hiring momentum down the
Labor Department also provides a figure on just how far across
industries the weakness spreads. Diffusion indexes measure that breadth
of change amongst industry categories and on a three month basis, only
42.9% of payrolls were rising in March. In recession that figure falls
into the 30-40% range, so it's close to giving a downturn signal.
Of the 42.9%, virtually all of the employment gains have
occurred in three of the categories listed in each month's data
release: education &amp; health, leisure &amp; hospitality, and
government. Within the first category, education payrolls have grown at
a 4.0% rate during the last three months which is nearly double the
growth from 2003 to 2007. Health care &amp; social services
payrolls also have grown at a roughly steady, firm 2.6% rate. In the
second category, jobs in the leisure &amp; hospitality sector also
have grown recently but at a lesser 1.4% rate which is down from the
2.5% average growth during the last four years. Finally, in the
government sector growth in payrolls has been limited to the state and
local sectors. Federal government payrolls have been trending lower
since 2003.
Construction sector jobs have suffered due to the fallout from
the housing sector's decline. Within the total, residential sector jobs
have lately been falling at an 11.3% rate. The depth of that rate of
decline has been mitigated somewhat by just a 3.0% shortfall in
commercial sector employment. Jobs amongst specialty trade contractors,
by far the largest grouping in the construction total, have been
falling at a 6.0% rate and by nearly double that rate in the
residential subgroup.
In nearly all of the goods producing categories there has been
job loss. The few exceptions are computers &amp; peripherals,
communications equipment and machinery. To the downside, job losses
have been logged in the semiconductor, metals, electrical equipment,
plastics and the paper industries. Most notable are the job losses in
the motor vehicle, furniture, textile and the apparel industries where
loss rates have been near or above double digit.
In the private service sector industries the rate of job
creation also has been hit severely. Jobs have fallen hard in the
retail trade sector, the information and in the financial service
businesses. Additionally, cutbacks in real estate sector jobs aside
from rental &amp; leasing have been running at a 3.6% annual rate;
a record rate of decline for this series which dates back only to 1990.
Employment in the finance &amp; insurance businesses has been
ticking down at a 0.6% rate led by a 5.8% rate of decline in investment
funds &amp; trusts. That has been offset by payroll growth at
commercial banks and securities &amp; investment houses.
Professional &amp; business service service jobs have been falling
at a 2.1% rate, the quickest since 2003. Jobs in temporary help
agencies have plummeted at an 8.9% rate. The information sector also
has lost jobs at a 1.1% rate over the last three months but jobs in
motion pictures &amp; sound recording have posted gains at a 5.5%
rate.
The data behind the series in this report all can be found in
Haver's USECON data base.
Population Aging, Labor Demand, and the
Structure of Wages is a working paper from the Federal
Reserve Bank of Boston and it can be found <a href="http://www.bos.frb.org/economic/wp/wp2007/wp0708.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407e.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407d.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment:
000s</a></th>
<th scope="col">% of Total Payrolls</th>
<th scope="col">March (000)</th>
<th scope="col">3-Month % (AR)</th>
<th scope="col">Y/Y %</th>
<th scope="col">2007 (%)</th>
<th scope="col">2006 (%)</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td></td>
<td>-80</td>
<td>-0.7</td>
<td>0.4</td>
<td>1.1</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">Private&nbsp;</td>
<td>84</td>
<td>-98</td>
<td>-1.0</td>
<td>0.3</td>
<td>1.3</td>
<td>1.9</td>
</tr>
<tr class="odd">
<td class="firstcol">
Goods Producing Industries</td>
<td>16</td>
<td>-93</td>
<td>-4.4</td>
<td>-2.8</td>
<td>-1.4</td>
<td>1.6</td>
</tr>
<tr>
<td class="firstcol">
Manufacturing</td>
<td>10</td>
<td>-48</td>
<td>-3.7</td>
<td>-2.2</td>
<td>-1.9</td>
<td>-0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">
Construction</td>
<td>5</td>
<td>-51</td>
<td>-6.6</td>
<td>-4.6</td>
<td>-1.0</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">
Service Producing Industries</td>
<td>68</td>
<td>-5</td>
<td>-0.2</td>
<td>1.0</td>
<td>1.8</td>
<td>2.1</td>
</tr>
<tr class="odd">
<td class="firstcol">
Retail Trade</td>
<td>12</td>
<td>-12</td>
<td>-1.9</td>
<td>-0.7</td>
<td>0.9</td>
<td>0.5</td>
</tr>
<tr>
<td class="firstcol">
Information</td>
<td>2</td>
<td>-6</td>
<td>-1.1</td>
<td>-0.7</td>
<td>-0.3</td>
<td>-0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
Financial Activities</td>
<td>6</td>
<td>-5</td>
<td>-1.2</td>
<td>-1.3</td>
<td>-0.2</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">
Real Estate, Rental &amp; Leasing</td>
<td>2</td>
<td>-5</td>
<td>-2.8</td>
<td>-2.0</td>
<td>-0.5</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
Professional &amp; Business</td>
<td>13</td>
<td>-35</td>
<td>-2.1</td>
<td>0.9</td>
<td>2.2</td>
<td>3.7</td>
</tr>
<tr>
<td class="firstcol">
Education, Health &amp; social services</td>
<td>14</td>
<td>42</td>
<td>2.9</td>
<td>3.0</td>
<td>2.8</td>
<td>2.6</td>
</tr>
<tr class="odd">
<td class="firstcol">
Leisure &amp; Hospitality</td>
<td>10</td>
<td>18</td>
<td>1.4</td>
<td>2.5</td>
<td>2.8</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol"> Government</td>
<td>16</td>
<td>18</td>
<td>1.0</td>
<td>1.1</td>
<td>1.0</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
Federal</td>
<td>2</td>
<td>2</td>
<td>-1.3</td>
<td>-0.1</td>
<td>-0.2</td>
<td>-0.0</td>
</tr>
<tr>
<td class="firstcol">
State</td>
<td>4</td>
<td>3</td>
<td>1.2</td>
<td>1.1</td>
<td>1.0</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
Local</td>
<td>10</td>
<td>13</td>
<td>1.3</td>
<td>1.3</td>
<td>1.3</td>
<td>0.9</td>
</tr>
</tbody>
</table>
</body></html>

The latest three month's employment data show that hiring momentum has turned negative. The 0.7% annual rate of decline in nonfarm payrolls through March is down from positive growth of 1.1% last year and of 1.8% during 2006. Is a [...]

U.S. Payrolls: Areas of Strength & Weakness

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407a.jpg" align="left" border="0" height="265" width="353">
German industrial production rose in February in spite of the
disappointing trends in orders and sales noted by Robert Brusca last
week. The result, however, is less surprising when one looks at the
composition of production. It is primarily the manufacturing sector
which is affected by orders and sales and the increase from January to
February in manufacturing production was only 0.08%. Production in
electricity, gas and water increased 1.3%. The big increases were in
the small mining and quarrying sector--4.2% and in the more important
sector, construction--3.7%. The attached chart shows the month-to-month
percent changes in the manufacturing and construction components of
Industrial Production.
Construction activity which started up last year after almost a
decade of decline benefited from the unseasonally warm weather.
According to the German weather bureau the average temperature in
Germany in February was 3.70 Celsius (38.70 Fahrenheit) compared with the 1961-1990 average of 0.40 Celsius (32.70 Fahrenheit). 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">GERMAN INDUSTRIAL PRODUCTION&nbsp;&nbsp; (2000=100)</th>
<th scope="col">Feb 08</th>
<th scope="col">Jan&nbsp; 08&nbsp;</th>
<th scope="col">Dec&nbsp; 07&nbsp;</th>
<th scope="col">Nov&nbsp;&nbsp;&nbsp; 07&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>121.5</td>
<td>121.0</td>
<td>119.3</td>
<td>117.6</td>
<td>116.0</td>
<td>109.8</td>
<td>103.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Manufacturing&nbsp;</td>
<td>126.5</td>
<td>136.4</td>
<td>124.7</td>
<td>122.6</td>
<td>121.0</td>
<td>113.2</td>
<td>106.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Mining and Quarrying</td>
<td>80.7</td>
<td>77.5</td>
<td>81.0</td>
<td>81.7</td>
<td>84.5</td>
<td>84.2</td>
<td>86.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Electricity, gas and water</td>
<td>98.4</td>
<td>97.1</td>
<td>103.2</td>
<td>106.4</td>
<td>102.5</td>
<td>105.9</td>
<td>104.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Construction</td>
<td>95.5</td>
<td>95.6</td>
<td>82.7</td>
<td>80.9</td>
<td>83.2</td>
<td>81.0</td>
<td>76.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;MONTH TO MONTH % CHANGE</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.41</td>
<td>1.42</td>
<td>1.45</td>
<td>-0.25</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Manufacturing&nbsp;</td>
<td>0.08</td>
<td>1.36</td>
<td>1.71</td>
<td>-0.16</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Mining and Quarrying</td>
<td>4.13</td>
<td>-4.32</td>
<td>-0.86</td>
<td>-2.74</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Electricity, gas and water</td>
<td>1.34</td>
<td>-5.91</td>
<td>-3.01</td>
<td>-0.75</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Construction</td>
<td>3.69</td>
<td>11.77</td>
<td>2.22</td>
<td>-0.25</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
</tbody>
</table>
</body></html>

German industrial production rose in February in spite of the disappointing trends in orders and sales noted by Robert Brusca last week. The result, however, is less surprising when one looks at the composition of production. It is [...]

German Industrial Production Surprises on the Upside: Warm Weather Boosts Construction Activity

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Michael J. Moran

260403A.jpg

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The report on payroll employment for March was impressive when viewed in isolation. Job growth was strong at 178,000, and the advance was broadly based. The construction and manufacturing sectors both posted solid gains, and the service-producing sector registered its firmest performance in more than a year. However, the gain might be viewed as a continuation of an unusual bout of random volatility. The March advance followed a notable drop in February (-133,000, revised down from -92,000), which followed an upside surprise in January (160,000, revised up from 126,000).

To be sure, statistical noise has been a factor in the past three months, but the results also represent an encouraging shift in job growth from that in the second half of last year, when employment rose only marginally in the third quarter and fell in the fourth. The net change in the past three months seems to signal that job growth is not drying up. The net advance so far this year is far from brisk, but it is clearly in the plus column and noticeably better than results in late 2025.

The unemployment rate also might be viewed as favorable, as it dipped 0.1 percentage point to 4.3%, although it was a “soft” decline. That is, employment as measured by the household survey declined 64,000, but the size of the labor force fell by a larger amount (off 396,000). Still, the jobless rate has climbed only modestly higher since the labor market started to ease in 2023, and it has inched lower in the past few months.

Unemployment has been contained despite modest hiring because layoffs also have been light. Initial claims for unemployment benefits have moved sideways in the past few years, indicating no change in the pace of layoffs. This pattern is confirmed by terminations data in the report on job openings and labor turnover (JOLTs) from the Bureau of Labor Statistics.

A supply-side shift in the labor market also has helped to contain the unemployment rate. Growth in the size of the labor force has slowed, and with fewer individuals seeking employment, those searching are more easily absorbed. Measures of the size of the labor force can be difficult to assess because there are breaks in the series every year. The Bureau of Labor Statistics adjusts the population controls used in its estimating procedure every January without revising past data to align with the new estimates. Thus, every January involves a discontinuity in the series, which will distort year-over-year changes.

However, Haver Analytics maintains a smoothed series originally developed by BLS to eliminate the breaks in the labor force data. As shown in the chart below, the smoothed series on the size of the labor force had been growing at a pace centered on 1.2% through 2022, but it has slowed irregularly since then (an observation for October is not available because of limited data collection during the government shutdown). The overall labor force is still growing, but the slower pace means fewer individuals looking for work, which most likely results in fewer being counted as unemployed.

The BLS collects data every month on both native-born and foreign-born individuals in the labor force. The breaks in these series are an issue, and Haver does not maintain smoothed series. However, the use of moving averages achieves enough smoothing to provide a sense of underlying changes. The native-born labor force has moved erratically in the past couple of years, but it has continued to advance. The foreign-born labor force, in contrast, seems to have peaked in mid-2025 and has generally declined since then.

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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- The jump of 178,000 in payroll employment in March easily exceeded the expected gain of 51,000.
- Following a net gain in January and February, the employment setting seems to have brightened slightly.
- A dip in the unemployment rate continued the recent pattern of marginal changes.

Payroll Employment: Another Surprise in March, The Third Consecutive

Robert Brusca

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French manufacturing industrial production was flat in February after a January rebound; output rose by 0.2% following a 0.8% decline in December.

The components of industrial production in February showed 2.6% increase in consumer durables, a 0.4% increase in consumer nondurables, flat output from capital goods, and a 0.7% month to month decline in intermediate output.

Sequentially, French output had been growing at a slow, steady pace of 0.8% at an annual rate over both 12 months and six months, but then slipped to a 6.1% contraction at an annual rate over three months. Consumer durable goods output on this span shows consistent increases, but there are no trends to clear acceleration or deceleration. Consumer nondurables trace an accelerating path of moderate means from -1.8% over 12 months, to -0.4% over six months, and then rising at a 5.5% annual rate over three months. Capital goods output is moving in the opposite direction, growing by 3.4% over 12 months, slowing to a 0.7% annual pace over six months, and then contracting at a 9.5% annual rate over three months. Intermediate goods output is falling at 0.8% pace over 12 months, but then it switches to an expansion rate of 0.8% over six months and 0.6% and over three months. There's nothing remarkable about these patterns, except there's some acceleration, some deceleration, and a lot of mulling about at low growth rates.

As a separate item, French auto production is slipping and decelerating, falling by 7.1% at an annual rate over 12 months, falling at a 7.9% pace over six months, and then plunging at a 19.3% annual rate over three months. On these same horizons, motor vehicle registrations fall by 14.7% over 12 months; the weakness pares back to an 11.2% annual rate decline over six months, and then it steps up to a 22.1% decline at an annual rate over three months. French demand for autos is not in good shape.

In the quarter to date—now two months into the first quarter—manufacturing industrial production is falling at a 0.8% annual rate. That pace is boosted by 9.4% annual rate gain in consumer durables output but restrained by just a 0.2% annual rate increase in consumer nondurable goods. Capital goods output is falling at a 1.9% annual rate, while intermediate goods output is falling at a 1% annual rate. Also in the quarter to date, automobile production is plunging at a 24.3% annual rate, while on the demand side, motor vehicle registrations are falling at a 15% annual rate.

French manufacturing data are somewhat confusing. The chart shows that the industrial production trend has been showing consistent increases over 12 months, but it has recently been pulling back relatively sharply. On the other hand, the manufacturing PMI for France has been consistently negative going back to mid-2022 and only in early 2026 has the manufacturing PMI been posting some values above the 50% mark, indicating that output was starting to actually expand. In March, the PMI reading for manufacturing has slipped back by the thinnest margin below the 50% mark.

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Of course, events in the Middle East make everything more speculative, with the war effectively closing the Strait of Hormuz and no certainty about how or when that is going to be sorted out. In the meantime, the potential threat of ongoing oil price pressures has put both the ECB and the Bank of England in a position to be more wary with policy, and they warned markets about the potential for rate hikes as soon as their next meetings are engaged. That also raises questions about the outlook for growth. But we continue to track and chronicle trends in the data. It's also quite clear that we could have events that will play out that could completely undermine these trends before they get a chance to run to conclusion. It's an important time to be wary and watch all developments—a lot is in play.

France

French IP Waffles

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 9,000 to 202,000 in the week ending March 28, from 211,000 in the week ending March 21, revised from 210,000. The four-week average declined 3,000 to 207,750 in the week ending March 28, from 210,750 the March 21 week, revised from 210,500. The Forecast Survey looked for 212,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 25,000 to 1.841 million in the week ending March 21, from 1.816 million in the week ending March 14. The four-week moving average declined to 1.839 million in the latest week from 1.846 million in the March 14 week. This is the lowest level for this average since September 28, 2024 when it was 1.834 million. The insured unemployment rate remained at 1.2% in the week of March 21. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending March 14, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.73%), Massachusetts (2.66%), Washington (2.39%), Minnesota (2.31%), California (2.17%), and New York (2.01%). The lowest rates were in Florida (0.31%), Louisiana (0.32%), Arkansas (0.36%), Alabama (0.38%), and North Carolina (0.40%). Rates in other notable states include Illinois (1.99%), Connecticut (1.82%), Pennsylvania (1.72%), and Texas (1.07%). 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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- New claims declined by 9,000 to 202,000.
- Continuing claims rose by 25,000 to 1.841 million.
- The insured unemployment rate remained at 1.2%.

U.S. Initial Unemployment Claims Edged Down in the Week of March 28

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The S&P manufacturing PMIs for March showed improvements in 44.4% of the 18 reporters. The median reading for the month was at 50.9, indicating that expanding output was the median reading through the period. The median change showed a small step back of 0.1 diffusion points month-to-month.

Sequentially, looking at average yearly activity compared to a year ago, six months compared to 12 months, and three months compared to six months, we see progress in train. For three months compared to six months, the proportion of reporters showing improvement is 72.2%. For these reporters, over six months compared to 12 months, there is a 61.1% improvement proportion, while for 12 months compared to 12 months ago, there is only a 27.8% improvement.

The median reading over three months on average is 50.7, while the median reading over six months is 50.0 and the median reading over 12 months is 49.4. These readings show a very slow but steady improvement in manufacturing over this horizon.

In addition, we calculate the queue percentile standings for each reporter—that is, the level of the current diffusion index compared to all of the observations back to January 2022, expressing the final number as the percentile standing for the current month in that queue. On that basis, the median percentile standing for this group of reporters is 76.5%. It tells us that the median standing is in the top 25 percentile of all the readings since January 2022 to date. That's a reasonably good result. For the euro area, the queue percentile standing is at the 89.8 percentile, while for Germany it's at its 91.8 percentile. For the Monetary Union and for Germany, the current numbers are some of the best we've seen during this period. However, that doesn't mean that they're necessarily stellar readings.

**PMI diffusion vs. PMI rank standings**
German diffusion in manufacturing is 52.2 in March; for the EMU it is 51.6. Germany posts the fourth-highest PMI rank standing and the fifth highest raw standing in March. The highest standing among all reporters is 52.6 from South Korea. This is a period in which no country was posting very strong manufacturing results. In fact, the United States, with a manufacturing PMI rank standing of 79.6, has a diffusion reading in March just a tick below Germany’s whose queue standing at 91.8 seems miles ahead of the U.S.—but it isn’t. Remember that the queue standings are about relative positioning.

Looking at the details, we see that below-median rank readings were logged by Mexico, Russia, India, Brazil, Indonesia, and Turkey. The Asian markets and developing economies seem to have a harder time working up to the standards achieved by other countries.

We also have averages by certain groups of countries. For example, the U.S., the U.K., the Monetary Union, Canada, and Japan—an expanded G10 groping—had an average reading of 51.3 in March, and for that group of countries, the improvements have been steady from 12 months to six months to three months. For the BRIC countries in March, the average standing was 50.4, and for that group there has been a very slight ongoing erosion. For the Asian group, on average, the March reading is 51.2, and there has been a progression to stronger readings from 49.9 over 12 months to 50.5 over six months and to 50.8 over three months.

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On balance, manufacturing was quite uneven in March; however, there's a progression of improvement that is still in place. But with rising oil prices, war in Iran, and lots of knock-on effects to supply trains, it's likely that these readings are going to fall on harder times in the months ahead—unless the Iran war can be wrapped up in very, very, short order. According to the Baltic Dry index, there hasn't been much reduction in global shipping of dry goods. That index excludes oil and other wet goods shipments that clearly have been impeded. However, giving it more time, we may see that the dry index begins to show some difficulties.

Global Manufacturing PMIs Stall—Will It Get Worse?

Andrew Cates

**Global shipping costs**
The Baltic Dirty Tanker Index has surged to multi-year highs, reflecting a sharp tightening in global oil shipping markets. The primary driver is the escalation in Middle East tensions, particularly the effective disruption to flows through the Strait of Hormuz—a critical artery for roughly a fifth of global oil trade. Heightened security risks, including missile and drone attacks on vessels and port infrastructure, have forced rerouting, increased insurance premia and reduced effective tanker supply. At the same time, longer voyage distances—especially for Gulf exports diverted around the Cape—are tying up capacity and amplifying rate pressures. The result is a classic squeeze: constrained supply of available ships meeting elevated demand for transport, pushing freight costs sharply higher.

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**Supply Chain Bottlenecks**
Flash PMI data point to a renewed build-up of supply chain pressures across the major economies. Supplier delivery times—where readings below 50 indicate slower deliveries—have deteriorated in both the US and UK, with the latter showing a particularly sharp decline. The euro area, while more stable, is also drifting in the same direction. This broad-based softening suggests that the disruptions visible in energy and shipping markets are now feeding into the real economy. Longer delivery times are typically an early indicator of tightening supply conditions, rising input costs and, ultimately, renewed pipeline inflation pressures. While not yet at the extremes seen during the pandemic, the direction of travel is clear: supply chains are becoming less efficient just as geopolitical risks intensify.

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**Policy Uncertainty Versus Market Volatility**
A striking divergence is emerging between policy uncertainty and financial market volatility. The US Economic Policy Uncertainty Index has risen sharply, reflecting the intensifying geopolitical backdrop, trade disruptions and an increasingly complex policy environment. By contrast, the VIX—while off its lows—remains relatively contained by historical standards. This gap suggests that financial markets may be underpricing the scale and persistence of current risks. Either uncertainty begins to recede, or market volatility has further to rise. For now, the message is clear: policymakers are operating in a far more uncertain world than markets appear to be discounting.

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**Oil Prices and Monetary Policy** 
The sharp rise in oil prices is once again feeding directly into short-term interest rate expectations, with a strong positive correlation evident between WTI and US 2-year Treasury yields. As energy prices surge, markets are reassessing the near-term inflation outlook and the likely policy response, pushing yields higher. This reflects a familiar dynamic: energy shocks tighten financial conditions not just directly, but via expectations of more restrictive monetary policy. That said, there are important caveats. Medium-term market-based inflation expectations remain relatively well contained, suggesting credibility in central banks’ ability to anchor inflation over time. Moreover, recent communication from Fed Chair Powell indicates that the Federal Reserve is in no immediate hurry to raise rates, pointing instead to a more cautious, data-dependent approach in the face of heightened uncertainty.

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**Loose Labour Markets**
Wage growth across the US, UK and euro area continues to moderate, pointing to a gradual loosening in labour market conditions. The sharp post-pandemic surge in wage pressures—particularly pronounced in the US—has clearly faded, with all three regions now on a downward trajectory. This matters in the current context: while the oil shock is pushing headline inflation higher and complicating the near-term outlook, easing wage dynamics reduce the risk of persistent second-round effects. In turn, this lessens the urgency for central banks to respond aggressively with tighter policy. The result is a more nuanced policy backdrop—one where energy-driven inflation pressures are rising, but underlying domestic cost pressures are moving in the opposite direction.

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**Headline Inflation in Advanced Economies**
Despite the recent energy shock, broader inflation dynamics across advanced economies remain relatively well behaved. The euro area HICP flash estimate rose from 1.9% in February to 2.5% in March, driven largely by higher energy prices. However, core inflation edged down to 2.3% from 2.4%, suggesting that pass-through into underlying price pressures remains limited for now. More generally, inflation across many advanced economies continues to hover close to central bank targets—a marked contrast to the peaks seen in 2022. While higher oil prices will almost certainly continue to lift headline inflation in the near term, and the risk is clearly tilted toward further upside, the broader picture for now remains one of relatively contained underlying pressures. This suggests the current shock is more likely to complicate the disinflation process—potentially slowing or interrupting it—rather than decisively reversing it, though the balance of risks has become less favourable.

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Amid tentative signs of de-escalation from the US administration over the past 48 hours—including suggestions that the conflict with Iran could conclude relatively quickly—financial markets have begun to retrace some of last week’s sharp repricing of Middle East risk. Oil prices have come off their highs, while equities and bonds have rallied as risk premia ease. That said, the earlier phase of the week saw a decisive adjustment: oil surged, front-end yields moved higher, and uncertainty rose as investors grappled with the implications of disrupted energy flows. Even now, the overall adjustment has been uneven—volatility has picked up, but not to levels typically associated with sustained geopolitical stress—raising questions about how fully markets are internalising both the risks and the rapidly shifting outlook. Our charts this week capture these cross-currents. Tanker rates have spiked as shipping routes are disrupted and capacity tightens (chart 1), while PMI delivery times point to early signs of supply chain strain feeding into the real economy (chart 2). At the same time, the divergence between elevated policy uncertainty and relatively contained market volatility suggests there could have been a degree of complacency (chart 3). The rise in oil prices is already feeding into higher short-term yields, though this is being tempered by cooling labour markets, anchored inflation expectations and more cautious central bank signalling (charts 4 and 5). Meanwhile, euro area flash CPI has picked up, but core inflation remains relatively benign, suggesting underlying price pressures are still contained for now (chart 6).

Economy in Brief: 2008

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