Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303d.jpg" width="353">
GDP growth in the Euro-Zone slowed in Q4 to 0.3% from 0.7% in Q3, according to the first full breakdown of Q4 data published this morning by Eurostat. These real growth rates are quoted in chained 2000 euros, adopted as the pricing methodology by Eurostat just three months ago.
Several major expenditure components of GDP contributed to the lower growth; most notably, private consumption fell outright by 0.2% and was up a sluggish 0.8% from a year ago. This was among the smallest year-on-year increases in the 10-year history of the data calculated on this basis. However, as we noted here yesterday, retail trade, at least in Germany, turned up sharply in January; perhaps this is a precursor to a better performance for consumer spending in general this quarter.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303e.jpg" width="353">
Fixed capital formation moderated to a 0.8% gain in Q4 from 1.1% in Q3. This is still a respectable performance and brought the year to 2.2%, the strongest gain since the tech slowdown began in 2000.
Net exports decreased, encompassing smaller gains in both exports and imports. As with investment, though, the Q4 result followed much stronger outcomes in Q2 and Q3, so can hardly be characterized as &quot;weak&quot; in a broader context. Indeed, observers, including ourselves have noted repeatedly that the export sector is a main support to the European economies at present.
So 2005 ended at a slow pace in Europe. But as mentioned above, retail trade showed some life in Germany already in January, and sentiment surveys have also improved. The Olympics may even give some boost to this quarter&#39;s performance. The ECB policymakers must believe gains of that sort will take hold, as they raised their key interest rates yesterday for the second time in three months. M. Trichet&#39;s announcement in fact indicated a concern that recently improved economic activity would threaten inflation, which is already hovering above the desired 2% pace. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@U2/@U219/@U21904/@U219042/@U219042.HTM">EuroZone12: GDP (Chained 2000 Euros)</a></th>
<th scope="col">Q3 2005</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
<th scope="col">Q4 2004 (yr/yr*)</th>
Yearly Totals*
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol">GDP</td>
<td>0.3</td>
<td>0.7</td>
<td>0.4</td>
<td>1.3</td>
<td>1.3</td>
<td>2.1</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Private Consumption</td>
<td>-0.2</td>
<td>0.5</td>
<td>0.3</td>
<td>0.8</td>
<td>1.3</td>
<td>1.5</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital Formation</td>
<td>0.8</td>
<td>1.1</td>
<td>1.0</td>
<td>2.2</td>
<td>2.1</td>
<td>2.3</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>0.5</td>
<td>3.4</td>
<td>2.0</td>
<td>4.6</td>
<td>3.8</td>
<td>6.5</td>
<td>1.1</td>
</tr>
<tr>
<td class="firstcol">-Imports</td>
<td>0.9</td>
<td>3.1</td>
<td>2.3</td>
<td>4.5</td>
<td>4.5</td>
<td>6.6</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body>
</html>

GDP growth in the Euro-Zone slowed in Q4 to 0.3% from 0.7% in Q3, according to the first full breakdown of Q4 data published this morning by Eurostat. These real growth rates are quoted in chained 2000 euros, adopted as the pricing [...]

Euro-zone Growth Eases to 0.3% in Q4

Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303c.jpg" width="353">
The Institute for Supply Management (ISM) reported that the February Business Activity Index for the non-manufacturing sector recovered most of the prior month&#39;s loss with a 3.3 point advance to 60.1. A reading above 50 indicates expansion. The gain outpaced Consensus expectations for a rise to 58.0.
Since the series&#39; inception in 1997 there has been a 53% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
The employment index seemed to lead the m/m improvement and rose sharply to 58.2, the highest level since August. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries. The new orders index was roughly stable after a sharp decline during January.
Pricing power deteriorated to the weakest level since June. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP Services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
&quot;Measured Pace&quot; in the Conduct of Monetary Policy from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20060301/cover.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/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Feb &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>60.1</td>
<td>56.8</td>
<td>60.4</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>64.8</td>
<td>67.2</td>
<td>67.0</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>


</html>

The Institute for Supply Management (ISM) reported that the February Business Activity Index for the non-manufacturing sector recovered most of the prior month's loss with a 3.3 point advance to 60.1. A reading above 50 indicates [...]

ISM Nonmanufacturing Index Recovered

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303a.jpg" width="353">
According to the University of Michigan, consumer sentiment fell throughout February, as indicated by a decline in the final month reading to 86.7 from the preliminary estimate of 87.4. Month to month, sentiment fell 4.9% and the decline outpaced Consensus expectations for decline to 87.5.
The m/m decline matched the Conference Board&#39;s report Tuesday that Consumer Confidence fell 4.8% (-2.6% y/y) during February.
Sentiment figures are not seasonally adjusted and during the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303b.jpg" width="353">
The current conditions index deteriorated 1.9% late in February and fell 4.3% for the full period as the index of personal finances fell 5.1% (-7.4% y/y) and the reading of buying conditions for large household goods fell 3.6% (0.0% y/y). Consumers&#39; assessment of gov&#39;t economic policy drooped 4.6% m/m (-10.8% y/y).
Consumer expectations held steady late in the month but for all of February were off 5.6% from January. The economic outlook deteriorated sharply with the index of expected business conditions during the next five years down 12.1% (-18.4% y/y) and the twelve month outlook off 8.6% (-15.8% y/y). Expectations for personal finances showed a m/m improvement of 1.7% (-3.9% y/y).
The mean expected inflation rate for the next twelve months was about stable m/m at 3.7%, still well below the 5.5% expected in October &amp; September.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
Income Taxes: Who Pays and How Much? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060301/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Feb (Final)</th>
<th scope="col">Feb (Prelim.)</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>86.7</td>
<td>87.4</td>
<td>91.2</td>
<td>-7.9%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>105.6</td>
<td>107.7</td>
<td>110.3</td>
<td>-3.3%</td>
<td>105.9</td>
<td>105.6</td>
<td>97.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>74.5</td>
<td>74.4</td>
<td>78.9</td>
<td>-11.7%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
</tr>
</tbody>
</table>
</body>
</html>

According to the University of Michigan, consumer sentiment fell throughout February, as indicated by a decline in the final month reading to 86.7 from the preliminary estimate of 87.4. Month to month, sentiment fell 4.9% and the [...]

U.S. Consumer Sentiment Fell Throughout February

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303a.jpg" width="353">
According to the University of Michigan, consumer sentiment fell throughout February, as indicated by a decline in the final month reading to 86.7 from the preliminary estimate of 87.4. Month to month, sentiment fell 4.9% and the decline outpaced Consensus expectations for decline to 87.5.
The m/m decline matched the Conference Board&#39;s report Tuesday that Consumer Confidence fell 4.8% (-2.6% y/y) during February.
Sentiment figures are not seasonally adjusted and during the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303b.jpg" width="353">
The current conditions index deteriorated 1.9% late in February and fell 4.3% for the full period as the index of personal finances fell 5.1% (-7.4% y/y) and the reading of buying conditions for large household goods fell 3.6% (0.0% y/y). Consumers&#39; assessment of gov&#39;t economic policy drooped 4.6% m/m (-10.8% y/y).
Consumer expectations held steady late in the month but for all of February were off 5.6% from January. The economic outlook deteriorated sharply with the index of expected business conditions during the next five years down 12.1% (-18.4% y/y) and the twelve month outlook off 8.6% (-15.8% y/y). Expectations for personal finances showed a m/m improvement of 1.7% (-3.9% y/y).
The mean expected inflation rate for the next twelve months was about stable m/m at 3.7%, still well below the 5.5% expected in October &amp; September.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
Income Taxes: Who Pays and How Much? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060301/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Feb (Final)</th>
<th scope="col">Feb (Prelim.)</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>86.7</td>
<td>87.4</td>
<td>91.2</td>
<td>-7.9%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>105.6</td>
<td>107.7</td>
<td>110.3</td>
<td>-3.3%</td>
<td>105.9</td>
<td>105.6</td>
<td>97.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>74.5</td>
<td>74.4</td>
<td>78.9</td>
<td>-11.7%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
</tr>
</tbody>
</table>
ISM Nonmanufacturing Index Recovered 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303c.jpg" width="353">
The Institute for Supply Management (ISM) reported that the February Business Activity Index for the non-manufacturing sector recovered most of the prior month&#39;s loss with a 3.3 point advance to 60.1. A reading above 50 indicates expansion. The gain outpaced Consensus expectations for a rise to 58.0.
Since the series&#39; inception in 1997 there has been a 53% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
The employment index seemed to lead the m/m improvement and rose sharply to 58.2, the highest level since August. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries. The new orders index was roughly stable after a sharp decline during January.
Pricing power deteriorated to the weakest level since June. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP Services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
&quot;Measured Pace&quot; in the Conduct of Monetary Policy from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20060301/cover.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/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Feb &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>60.1</td>
<td>56.8</td>
<td>60.4</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>64.8</td>
<td>67.2</td>
<td>67.0</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>
Euro-zone Growth Eases to 0.3% in Q4 
by <a href="/comment/Stone.html">Carol Stone</a> March 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303d.jpg" width="353">
GDP growth in the Euro-Zone slowed in Q4 to 0.3% from 0.7% in Q3, according to the first full breakdown of Q4 data published this morning by Eurostat. These real growth rates are quoted in chained 2000 euros, adopted as the pricing methodology by Eurostat just three months ago.
Several major expenditure components of GDP contributed to the lower growth; most notably, private consumption fell outright by 0.2% and was up a sluggish 0.8% from a year ago. This was among the smallest year-on-year increases in the 10-year history of the data calculated on this basis. However, as we noted here yesterday, retail trade, at least in Germany, turned up sharply in January; perhaps this is a precursor to a better performance for consumer spending in general this quarter.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303e.jpg" width="353">
Fixed capital formation moderated to a 0.8% gain in Q4 from 1.1% in Q3. This is still a respectable performance and brought the year to 2.2%, the strongest gain since the tech slowdown began in 2000.
Net exports decreased, encompassing smaller gains in both exports and imports. As with investment, though, the Q4 result followed much stronger outcomes in Q2 and Q3, so can hardly be characterized as &quot;weak&quot; in a broader context. Indeed, observers, including ourselves have noted repeatedly that the export sector is a main support to the European economies at present.
So 2005 ended at a slow pace in Europe. But as mentioned above, retail trade showed some life in Germany already in January, and sentiment surveys have also improved. The Olympics may even give some boost to this quarter&#39;s performance. The ECB policymakers must believe gains of that sort will take hold, as they raised their key interest rates yesterday for the second time in three months. M. Trichet&#39;s announcement in fact indicated a concern that recently improved economic activity would threaten inflation, which is already hovering above the desired 2% pace. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@U2/@U219/@U21904/@U219042/@U219042.HTM">EuroZone12: GDP ( Chained 2000 Euros)</a></th>
<th scope="col">Q3 2005</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
<th scope="col">Q4 2004 (yr/yr*)</th>
Yearly Totals*
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol">GDP</td>
<td>0.3</td>
<td>0.7</td>
<td>0.4</td>
<td>1.3</td>
<td>1.3</td>
<td>2.1</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Private Consumption</td>
<td>-0.2</td>
<td>0.5</td>
<td>0.3</td>
<td>0.8</td>
<td>1.3</td>
<td>1.5</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital Formation</td>
<td>0.8</td>
<td>1.1</td>
<td>1.0</td>
<td>2.2</td>
<td>2.1</td>
<td>2.3</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>0.5</td>
<td>3.4</td>
<td>2.0</td>
<td>4.6</td>
<td>3.8</td>
<td>6.5</td>
<td>1.1</td>
</tr>
<tr>
<td class="firstcol">-Imports</td>
<td>0.9</td>
<td>3.1</td>
<td>2.3</td>
<td>4.5</td>
<td>4.5</td>
<td>6.6</td>
<td>2.9</td>
</tr>
</tbody>
</table>


</html>

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060302e.jpg" width="353">
Four widely diverse areas reported retail trade today for January. Generally, these reports indicated some strength. In Hong Kong, for example, sales were up 11.6% over a year ago, extending a firmer performance into a second month. In a larger area, Germany&#39;s sales rebounded to a 2.2% year-on-year gain after being down in December. Australia and Estonia also had favorable sales increases in January.
The Hong Kong retail sales firmed noticeably for consumer electronics, and clothing had a modest increase, apparently picking up after a lull in late summer and autumn. Also in that region of the world, sales in Australia gained 4.2% from January 2005, with the food and hospitality sectors leading. Department stores and recreation good were both down from a year ago.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060302f.jpg" width="353">
For Germany, only total sales are available in their initial release. However, notably, the improvement here corresponds to the improved sentiment of retail trade business executives reported in the Ifo survey. In detail Ifo data released Tuesday, the Business Climate Index for that sector was 96.0 in January, the third highest since 2001. Then for February, the index climbed more than 4 points to 100.7, its first reading above 100 since the base year of 2000. The correlation between year-to-year percent changes in this index and in actual retail sales is 0.44. Correlations of other Ifo indexes are even better; for instance, the total index is 0.53 and the index for consumer goods less food is 0.62. Thus, business executives of related production industries are at least as concerned about the performance in final sales as managers of the stores themselves.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060302g.jpg" width="353">
Finally, retail sales gains were good in Estonia. The year-on-year pace in January was 23%, although this magnitude partly reflects a base effect in which January 2005 was quite weak. So, when we look at the seasonally adjusted data calculated by Haver Analytics, we see that the latest figure actually shows a small decrease from December&#39;s amount. Despite this modest setback, volume growth in Estonia has actually been quite strong, up 18.8% from a year ago and off just 0.4% from December. The last three months of 2005 averaged 2.5% month-to-month gains in the volume index. Thus, Estonian consumer demand appears quite buoyant. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Retail Trade, Yr/Yr % Changes</th>
<th scope="col">Jan 2006</th>
<th scope="col">Dec 2005</th>
<th scope="col">Nov 2005</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Hong Kong</td>
<td>11.6</td>
<td>6.8</td>
<td>4.2</td>
<td>6.8</td>
<td>10.8</td>
<td>-2.3</td>
</tr>
<tr>
<td class="firstcol">Australia</td>
<td>4.2</td>
<td>3.9</td>
<td>3.8</td>
<td>2.8</td>
<td>7.2</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>2.2</td>
<td>-0.5</td>
<td>1.1</td>
<td>1.5</td>
<td>2.0</td>
<td>-0.5</td>
</tr>
<tr>
<td class="firstcol">Estonia</td>
<td>23.0</td>
<td>16.4</td>
<td>14.9</td>
<td>12.4</td>
<td>15.5</td>
<td>9.5</td>
</tr>
</tbody>
</table>
</body>
</html>

Four widely diverse areas reported retail trade today for January. Generally, these reports indicated some strength. In Hong Kong, for example, sales were up 11.6% over a year ago, extending a firmer performance into a second month. [...]

January Retail Trade Gains in 4 Very Diverse Places

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060302c.jpg" width="353">
Initial unemployment insurance claims last week reversed most of the prior week&#39;s revised decline and rose 15,000 to 294,000. Consensus expectations had been for 285,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims rose to 287,250 (-6.5% y/y).
Continuing unemployment insurance claims fell 2,000 following the prior week&#39;s revised 16,000 decline which compared to a rise estimated initially.
The insured rate of unemployment was stable at 1.9% for the third week.

<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">Unemployment Insurance (000s)</a></th>
<th scope="col">02/25/06</th>
<th scope="col">02/18/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>294</td>
<td>279</td>
<td>-7.0%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,486</td>
<td>-6.8%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial unemployment insurance claims last week reversed most of the prior week's revised decline and rose 15,000 to 294,000. Consensus expectations had been for 285,000 claims. During the last ten years there has been a (negative) [...]

Initial Unemployment Insurance Claims Ticked Higher

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060302d.jpg" width="353">
Challenger, Grey &amp; Christmas reported that job cut announcements during February fell 15.5% (-19.3% y/y) to 87,437, the lowest level since October.
Layoffs in the auto industry fell sharply from the heated January pace but still were more than double the prior February&#39;s level. Announced job cuts in government rose 11.6% to a level more than double the prior February while layoffs in the financial industry surged m/m to a level more than double the prior year.
During the last ten years there has been an 84% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported the third consecutive m/m drop in announced hiring plans (-69.2% y/y).

<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/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>87,437</td>
<td>103,466</td>
<td>-19.3%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
</table>
</body>
</html>

Challenger, Grey & Christmas reported that job cut announcements during February fell 15.5% (-19.3% y/y) to 87,437, the lowest level since October. Layoffs in the auto industry fell sharply from the heated January pace but still were [...]

Challenger Layoffs Down Sharply

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060302b.jpg" width="353">
Warm temperatures in January did little for the value of construction put in place which increased just 0.2%. Consensus expectations had been for a 1.1% gain but the firm 1.0% advance in December was unrevised.
Residential building rose only 0.1 following a downwardly revised 0.9% December increase. New single family building inched up just 0.1% (13.2% y/y) while the value of improvements rose 0.2% (-10.6% y/y). The value of new multi-family residential construction fell 0.5% (+12.4% y/y).
Nonresidential building added 0.5% to a downwardly revised 1.1% December increase. Office construction slipped 0.2% (+8.9% y/y) and commercial building rose 0.4% (+9.5% y/y). These y/y gains pale when compared to multi-retail commercial which rose 7.9% in January (40.0% y/y).
Public construction spending rose 0.2% following an upwardly revised 1.3% December increase. Construction activity on highways &amp; streets, nearly one third of the value of public construction spending, recovered the prior month&#39;s decline and rose 0.9% (12.7% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<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/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.2%</td>
<td>1.0%</td>
<td>7.4%</td>
<td>9.1%</td>
<td>10.9%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.2%</td>
<td>0.9%</td>
<td>6.3%</td>
<td>9.6%</td>
<td>13.6%</td>
<td>6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>0.1%</td>
<td>0.9%</td>
<td>6.5%</td>
<td>11.4%</td>
<td>18.2%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.5%</td>
<td>1.1%</td>
<td>5.6%</td>
<td>5.2%</td>
<td>3.9%</td>
<td>-5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>0.2%</td>
<td>1.3%</td>
<td>11.3%</td>
<td>7.6%</td>
<td>2.5%</td>
<td>2.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

Warm temperatures in January did little for the value of construction put in place which increased just 0.2%. Consensus expectations had been for a 1.1% gain but the firm 1.0% advance in December was unrevised. Residential building [...]

U.S. Construction Increase Light

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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


Privacy Policy

Disclaimer

Contact us

Service Health

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

London

Singapore

New York

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Sandy Batten

260515r1.jpg

260515s1.jpg

Industrial production (IP) rose a much larger-than-expected 0.7% m/m in April, rebounding from an upwardly revised 0.3% m/m decline in March (previously -0.5% m/m), according to data released by the Federal Reserve Board. The Action Economics Survey looked for a 0.2% monthly gain. The y/y rate also rebounded in April, rising to 1.4% y/y after having fallen to 0.7% in March. IP has clearly trended up since late last year. Since November 2025, it has grown at a 3.6% annual rate. The current level of output is the highest since August 2019 but is still 1.5% below the November 2018 series peak.

Manufacturing output led the April rebound, rising 0.6% m/m (1.3% y/y) following an upwardly revised 0.1% monthly increase in March (previously -0.1% m/m). Mining output fell in April for the second consecutive month, edging down 0.1% m/m (+0.2% y/y) after a 1.6% monthly drop in March (revised down from -1.2% m/m). Utilities production rebounded in April, jumping 1.6% m/m (2.7% y/y) and more than offsetting a 1.4% monthly decline in March (revised up from -2.3% previously). The rebound in utilities output reflected a 1.1% rise in electricity production and a 7.3% monthly jump in natural gas distribution, the first monthly gain in four months.

Within manufacturing, durable goods production jumped 1.2% m/m (3.2% y/y) in April after having been unchanged in March. A 3.7% m/m rebound in motor vehicles and parts production, the largest monthly gain since May 2025, led the April increase. Motor vehicles and parts production had fallen 2.4% m/m in March. Production of computers and electronic products increased 1.5% m/m, the fourth consecutive monthly rise. Aerospace output rose 1.6% m/m in April, the third consecutive monthly gain and the largest since July 2025. By contrast, furniture production fell 1.8% m/m, the third consecutive monthly decline. 

Output of nondurable manufactured goods edged down 0.1% m/m (-0.6% y/y) in April, the first monthly decline in four months. Production of apparel and leather goods slumped 2.2% m/m on top of a 2.0% monthly fall in March. Chemical output fell 0.9% m/m in April, its first monthly decline in four months. Output of plastics and rubber products fell 0.9% m/m, the first monthly fall in four months. By contrast, production of petroleum and coal products rose 1.0% m/m in April, the same monthly increase as in March.

By market group, output of consumer goods rebounded in April, increasing 0.9% m/m (-0.2% y/y) following a 0.8% m/m decline in March. Production of business equipment surged 1.5% m/m (+6.0% y/y) in April, the largest monthly gain since March 2025. Output of construction supplies was unchanged in April from March (+1.2% y/y) following a 0.9% m/m gain in March. Materials production rebounded in April, rising 0.5% m/m (1.2% y/y) after a 0.4% m/m decline in March.

In special classifications, output of selected high-tech industries increased 1.0% m/m (+9.2% y/y) in April following a 0.5% monthly gain in March. The rebound in motor vehicles and parts production reflected a 5.3% monthly surge in vehicle output, the largest monthly gain since May 2025. Manufacturing output excluding selected high-tech industries rose 0.6% m/m in April, the largest increase since February 2025, following a 0.1% m/m increase in March. Manufacturing output excluding both selected high-tech industries and motor vehicles and parts advanced 0.3% m/m in April, the same monthly gain as in March.

Capacity utilization rose to 76.1% in April from 75.7% in March. The April reading was the highest since last August but was still 3.3%-points below its long-term (1972-2025) average. Manufacturing capacity utilization increased to 75.8% in April from 75.4% in March, 2.4%-points below its long-term average.

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.



260515t1.jpg

260515u1.jpg

- Total industrial output increased a much larger-than-expected 0.7% m/m in April with a small upward revision to March.
- Manufacturing output increased 0.6% m/m, led by a 5.3% m/m rebound in vehicle production.
- Mining output edged down 0.1% m/m, while utilities production rose 1.9% m/m.
- The headline rate of capacity utilization rose to 76.1% in April, its highest reading since last August but still well below its long-term average.


U.S. Industrial Production Jumped in April

Robert Brusca

260515e.jpg

Industrial orders in Canada are back on an expansion path with orders growing 4.7% in March on top of a 6.9% gain in February. These statistics chronicle Canadian orders digging out from a hole they fell into early in 2026. Now the data show emerging sequential growth in Canadian orders, which are advancing 3.6% over 12 months at a 14.9% annual rate over six-months, and a 26.7% annual rate over three-months. Still, on the chart that plots the year-over-year growth rates these recent accelerated rates of growth appear as mere recoveries from what had been earlier weakness. It remains to be seen how much acceleration the Canadian economy will actually undergo.

Unfilled orders expanded in March for the second month in a row, growing 2.4% after growing 1.4% in February once again following the recovery theme.

Manufacturing shipments grew by 3% in March after growing 3.4% in February and after dropping sharply in January - again echoing the recovery theme. Durable goods show two months of increases with the March increase weak after a very strong rise in February. Motor vehicle output recovered very strongly in February, after falling at a 37.1% annual rate in January; motor vehicle output is up by 15% in March, a hefty growth rate but short of what was posted in February. Once again, we see an echo of the theme of recovery. However, shipments of durable goods excluding motor vehicles are less robust, after dropping 1.8% in January output rose by 3.8% in February and has fallen back, dropping by 1.1% in March, a small fly in the ointment of this recovery theme for Canada. And nondurable goods shipments saw a small increase in January of 0.2%, a flat February, and now an extremely strong, 5.6% month-to-month gain in March.

Canada's sequential growth rates are on the verge of showing broad acceleration. Orders clearly do accelerate from 12-months to six-months to three-months. Unfilled orders, however, accelerate over six-months compared to 12-months and then take a small step back over three-months to an annualized growth rate of 13.4% - a very small step back that is still far above the 12-month growth pace. Manufacturing shipments, too, show a small flaw in acceleration as the 6-month pace dips ever so slightly before logging a very strong 3-month pace. Durable goods then are an exception to the acceleration theme; however, nondurable goods get back on board with the strong acceleration move.

**Rankings**
The rank standings for these categories are based on annual growth rates and comparison with data extend back approximately 25 years. Orders have a 58-percentile standing, unfilled orders have a 57-percentile standing, while manufacturing shipments have a 62-percentile standing. Shipments for durable goods durables excluding motor vehicles and from motor vehicles as a stand-alone have rankings in their 30th- to 40th-percentiles, below their historic medians. (medians occur at a ranking of 50). However, nondurables have an extremely strong 80.5 percentile standing. The data are consistent, the recovery and progress with the exception that durable goods shipments that are not fully on board and languish below their historic median results. Ranking the data over six-month growth rates improves the results somewhat and brings motor vehicles on board for a growth rate that is above its historic median.

**Signs of improvement**
Goods-based industry shows signs of picking up even in March as oil prices were rising and industry was facing greater challenges. The US industrial production report for April, similarly, shows acceleration across the board, even as the economy continued to deal with the difficulties of rising oil prices. Of course, the Canadian US economies are closely linked; we would expect the manufacturing sectors to be performing with some degree of synchronization. However, there's no reason to be complacent about the outlook. Oil prices have continued to rise, the challenge to consumers is strong and across all countries. In the US special tax cuts enacted last year, which went into effect earlier this year, have helped to deliver extra money to consumers that have helped them deal with the oil price shock. But these were funds that were supposed to help stimulate the economy to higher growth and were planned by the President to help him with midterm elections coming later in the year. The US economy still has to deal with those realities with sharply divided political reality as well.

**Outlook**
The US acrimony with Canada has taken a back burner for a while. And as that has happened the Canadian economy has come back to life. However, Canada still has some problems with inflation although it also has a broader inflation target to accommodate some flexibility. And the prospect for more inflation because of global oil prices continues to hang in the balance. The results for March are encouraging but certainly not definitive. Canada has mounted a nice recovery after a period of difficulty earlier in the year but it's still hard to say what comes next.



260515e1.jpg

Canada

Canadian Industry Perks Up

Andrew Cates

**A Tug of War Between AI Hope and Geopolitical Shock**
The latest Blue Chip Economic Indicators survey highlights a growing divergence between economies benefiting from AI-driven optimism and those more exposed to the inflationary consequences of renewed geopolitical instability. Taiwan stands out as the clearest AI beneficiary, with growth forecasts revised sharply higher while inflation expectations have risen only modestly, reflecting surging semiconductor demand and continued investment in global technology supply chains. China also remains relatively resilient, supported by ongoing AI-related capital spending and stronger technology sectors. By contrast, the euro area and UK have seen much larger upward revisions to inflation forecasts alongside weaker or declining growth expectations, underscoring their greater vulnerability to the recent Middle East shock and higher energy costs. Korea sits somewhere in between: benefiting from the AI hardware cycle but still exposed to trade and energy headwinds. Overall, the chart illustrates the increasingly important push-and-pull shaping the global outlook: AI optimism and productivity hopes on one side, and geopolitical fragmentation, energy insecurity and supply-side inflation pressures on the other.

260513Z1.jpg

**Forecasters See Contained Pass-Through**
Against this backdrop, our latest Blue Chip special question sought to gauge whether economists believe the recent rise in energy prices will remain largely contained — or whether it risks spilling more meaningfully into underlying global inflation dynamics. The results suggest forecasters have become somewhat less concerned about a broad and persistent inflationary impulse since April. A larger share of respondents in the May survey now expect only a “limited and temporary” pass-through into core inflation, while the proportion anticipating “moderate and persistent” effects has declined noticeably. Very few panelists expect significant second-round effects, implying that most still believe inflation expectations and wage-setting behaviour remain relatively well anchored. In part, this reflects confidence in central bank credibility and the view that softer global demand conditions will constrain firms’ pricing power. Yet the persistence of a sizeable minority still expecting moderate pass-through underscores the uncomfortable tension facing policymakers. 

260513Z2.jpg

**Energy Reawakens as a US Inflation Driver**
While survey respondents generally expect only limited pass-through from higher energy prices into broader inflation, the latest US CPI data provide a reminder that the process may already be underway at the margin. April’s CPI report showed core inflation coming in slightly firmer than expected, suggesting underlying price pressures remain more persistent than many policymakers had hoped. The decomposition of CPI inflation highlights that services continue to dominate overall inflation dynamics, reflecting still-elevated wage and labour-intensive price pressures across the economy. However, the more notable recent development has been the renewed contribution from energy prices, which had previously acted as a disinflationary force through much of 2025. Food inflation has also remained comparatively steady, while non-energy goods prices continue to exert only modest upward pressure despite ongoing tariff and supply-chain concerns. Taken together, the data reinforce the idea that the US economy is not facing a classic demand collapse, but rather a more uncomfortable supply-side environment in which geopolitical energy shocks risk colliding with still-resilient domestic demand, AI-related investment spending and sticky service-sector inflation.

260513Z3.jpg

**AI: The Powerful Counterweight to Geopolitical Headwinds**
If rising energy prices and geopolitical instability represent one major force shaping the current macroeconomic outlook, the extraordinary surge in AI-related investment represents the other. The latest data from Our World in Data show global private investment in AI accelerating sharply again in 2025, reaching close to $300 billion — more than double the level seen just two years earlier. The United States continues to dominate the global AI landscape, accounting for the overwhelming majority of private investment spending, while China and Europe remain considerably smaller contributors despite continued growth. The scale and speed of the 2025 increase is particularly striking given the broader backdrop of elevated policy uncertainty, trade fragmentation and concerns about slowing global productivity growth. In effect, the global economy is now being pulled in two competing directions: on one side, geopolitical tensions, supply-chain fragilities and more recent energy shocks are weighing on confidence and raising supply-side costs; on the other, AI enthusiasm is driving an enormous wave of capital expenditure, infrastructure build-out and technology-related demand. This helps explain why growth expectations — particularly in the US and parts of Asia — have remained comparatively resilient despite an increasingly uncertain global environment.

260513Z4.jpg

**Industrial Winners and Losers in a Fragmenting Global Economy**
The divergence in industrial performance across advanced economies has become increasingly striking. Taiwan has emerged as one of the clearest beneficiaries of the global AI boom, with industrial production surging as semiconductor demand, data-centre investment and advanced electronics exports continue to accelerate. Denmark has also significantly outperformed, though for very different reasons, with the extraordinary global success of its pharmaceutical sector — particularly weight-loss and diabetes drugs — driving a powerful expansion in manufacturing output. By contrast, the UK and Germany have experienced a far weaker industrial recovery. In both cases, elevated energy costs and greater dependence on imported energy have weighed heavily on industrial competitiveness since the post-pandemic energy shock. Germany’s large manufacturing sector has been particularly exposed to higher natural gas prices and weaker external demand, while the UK has continued to struggle with a combination of high energy costs, weak productivity growth and subdued business investment. The chart highlights an increasingly important feature of the global economy: countries exposed to powerful structural growth themes such as AI or pharmaceuticals are pulling away from those still burdened by energy dependence and deteriorating industrial competitiveness.

260513Z5.jpg

**China’s Pulse Is Picking Up Again**
China’s economic backdrop has shown clearer signs of improvement in recent months, with both the Citigroup Economic Surprise Index and the Yicai High Frequency Economic Activity Index moving higher. The rebound suggests that incoming data have begun consistently outperforming expectations after a prolonged period of disappointment. Part of the recent improvement likely reflects the cumulative effects of policy easing, including targeted fiscal support, infrastructure spending and further efforts to stabilise the property sector. Export demand has also remained more resilient than many expected, helped in part by the continued strength of global technology and AI-related supply chains. At the same time, improving domestic mobility and energy usage indicators point to firmer underlying activity momentum. The Yicai index itself is designed to provide a near real-time pulse of the Chinese economy using a basket of high-frequency indicators including subway usage, air pollution, coal consumption, freight activity, unemployment and bankruptcy trends. While China still faces significant structural headwinds — including weak household confidence, property-sector fragilities and deflationary pressures — the recent pickup suggests that growth momentum may be stabilising at a time when several other major economies are becoming more vulnerable to geopolitical and energy-related shocks.

260513Z6.jpg

The global economy is still caught between two powerful and competing forces. On one side, the AI investment boom continues to support growth, industrial activity and equity markets, particularly in the US and parts of Asia. On the other, renewed Middle East tensions and higher energy prices are adding to inflation risks and broader policy uncertainty. The latest Blue Chip survey reflects this divide clearly: growth expectations have generally held up best in economies tied to AI-related investment and technology supply chains, while inflation forecasts have risen more sharply in more energy-exposed economies such as the UK and euro area (chart 1). Forecasters still largely expect only limited pass-through from higher energy prices into core inflation, although recent US CPI data suggest underlying price pressures remain somewhat sticky (charts 2 and 3). At the same time, the extraordinary continued surge in global AI investment — now approaching $300 billion annually — highlights the sheer scale of capital being deployed into semiconductors, data centres and digital infrastructure, particularly in the United States (chart 4). The divergence in industrial production trends also reinforces the growing gap between economies benefiting from structural growth drivers — such as Taiwan’s semiconductor sector and Denmark’s pharmaceutical industry — and those struggling with higher energy costs and weaker competitiveness, notably Germany and the UK (chart 5). Meanwhile, improving Chinese activity indicators suggest policy support and stronger technology demand may finally be helping to stabilise growth (chart 6). Overall, the world economy remains resilient, but increasingly uneven, with AI-related investment continuing to offset — though not eliminate — the drag from geopolitical fragmentation and rising energy insecurity.

Charts of the Week: The Tug of War

260514v5.jpg

260514w5.jpg

Total retail sales rose a solid 0.5% m/m (4.9% y/y) in April on top of a slightly downwardly revised 1.6% monthly jump in March (previously 1.7%), according to data released by the U.S. Census Bureau. The Action Economics Forecast Survey looked for a 05% m/m gain. Excluding autos, other sales increased 0.7% m/m (6.3% y/y) in April following an unrevised 1.9% monthly jump in March. Expectations were for a 0.6% monthly increase. The strong performance in March and the additional solid gain in April put the April level up 7.8% at an annual rate from the Q1 average, providing a very solid start for Q2.

As expected, the continued rise in retail gasoline prices boosted gasoline sales further in April. Gasoline sales increased 2.8% m/m in April following a 13.7% m/m surge in March and accounted for more than 40% of the April increase in total sales. However, sales were solid even without gasoline sales. Total sales excluding gasoline rose 0.3% m/m in April versus a 0.7% monthly gain in March. Sales excluding both autos and gasoline increased 0.5% m/m in April following a 0.7% m/m rise in March.

The control group of sales (total sales excluding food services, autos, gasoline and building materials that the BEA uses to construct PCE in the national accounts) posted another solid increase in March, rising 0.5% m/m in April following an upwardly revised 0.8% m/m increase in March (previously (0.7% m/m). The solid performances of the control group sales in March and April provide a strong start to Q2. April control-group sales are 5.4% at an annual rate above the Q1 average, in line with the 5.7% annualized increase in Q1. Consumer spending remains surprisingly resilient notwithstanding the recent hit to disposable income from the marked increase in energy prices.

Sales across major sectors were varied in April. Consumers clearly spent more on necessities, owing largely to higher prices. Food sales increased 0.8% m/m in April on top of a 1.0% m/m rise in March. And as already noted, gasoline sales posted another outsized monthly increase. By contrast, department store sales slumped 3.2% m/m, clothing sales fell 1.5% m/m, auto sales declined 0.4% m/m and furniture sales fell 2.0% m/m. More encouragingly, sales of nonstore retailers rose 1.1% m/m, their fourth consecutive solid monthly gain. And sales at restaurants increased 0.6% m/m in April, their third consecutive monthly rise. Analysts frequently use restaurant sales as a barometer of consumer attitudes, believing that consumers would not eat out regularly if they were under serious financial stress.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.


260514x5.jpg

260514y5.jpg

- Total sales increase 0.5% m/m in April after a 1.6% monthly jump in March.
- Gasoline sales rose 2.8% m/m in April on top of a 13.7% surge in March.
- Auto sales fell 0.4% m/m after a 0.6% m/m rise in March.
- Excluding auto and gasoline sales, remaining sales increased by a solid 0.5% m/m in April versus a 0.7% m/m rise in March.
- Sales of the retail control group that is used to construct PCE rose 0.5% m/m in April and are 5.4% annualized above the Q1 average, providing a good start to Q2.


U.S. Retail Sales Slowed in April But Remained Solid

Kathleen Stephansen, CBE

260514a8.jpg

260514b8.jpg


Initial claims for unemployment insurance rose by 12,000 to 211,000 in the week ending May 9, from 199,000 in the week ending May 2, revised from 200,000. The four-week average rose 750 to 203,750 in the week ending May 9, from 203,000 the May 2 week, revised from 203,250. The Action Economics/Haver Analytics Survey looked for 205,000 claims to have been filed. 

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 24,000 to 1.782 million in the week ending May 2, from 1.758 million in the week ending April 25, revised from 1.766 million. The four-week moving average declined to 1.781 million in the latest week from 1.788 million in the April 25 week. The four-week moving average reached the lowest level since May 2024. The insured unemployment rate rose back to 1.2% in the week of May 2 from the one-week dip to 1.1% in the April 25 week. It had been at 1.2% since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending April 25, the highest unemployment rates were in Rhode Island (2.29%), New Jersey and Massachusetts (both 2.20%), and Washington (2.15%). The lowest rates were in Florida and Louisiana (both 0.31%), South Dakota (0.32%), Alabama and Arkansas (both 0.36%), North Carolina (0.38%), Tennessee (0.47%) and Iowa, Kansas and Virginia (all 0.48%). Rates in other notable states include California (1.99%), New York (1.66%), Illinois (1.56%), Pennsylvania (1.28%), and Texas (1.03%). 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.


260514c8.jpg

260514d8.jpg

- New claims rose by 12,000 to 211,000.
- Continuing claims rose by 24,000 to 1.782 million.
- The insured unemployment rate was back up to 1.2% in the week of May 2, from the one-week dip to 1.1% the prior week.

Economy in Brief: 2006

Jump to:

Euro-zone Growth Eases to 0.3% in Q4

ISM Nonmanufacturing Index Recovered

U.S. Consumer Sentiment Fell Throughout February

U.S. Consumer Sentiment Fell Throughout February

January Retail Trade Gains in 4 Very Diverse Places

Initial Unemployment Insurance Claims Ticked Higher

Challenger Layoffs Down Sharply

U.S. Construction Increase Light