Tom Moeller

For a gallon of regular gasoline, the retail price fell by a nickel last week to the lowest level since mid-April. According to the U.S. Department of Energy survey, at an average of $3.48 per gallon gasoline prices are down 63 cents [...]

U.S. Gasoline Prices Fell toLowest Since April, Demand Growth Lowest Since 1997

Louise Curley

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006d.jpg" align="left" border="0" height="265" width="353">
Stock prices in Europe, Japan and the emerging markets
appear to have moved in lock step with those in North America over the
past year as shown in the first chart that plots Morgan Stanley Capital
International (MSCI) daily stock prices.&nbsp; This is in contrast
to earlier periods when it was possible to reduce risk by geographic
diversification, particularly into the emerging
markets.&nbsp;&nbsp;When emerging markets began to be a
significant factor in the universe of world's stock markets, their
stock prices tended to move independently of those in the developed
markets.&nbsp; From May 1995 to December, 2001, the correlation
between the stock prices of the emerging markets and those of North
America, for example, was .46 as shown in the second chart.&nbsp;
The&nbsp; R2 = .21, means that only 21% of
the change in one market affected the other market. Since then the
prices of the two stock markets have tended to move together. The third
chart shows that the correlation between the two series from January
2002 to the present has risen to .96, with an R2&nbsp;
= .92, indicating that 92% of the change in one markets affected the
other market. These charts are based on the&nbsp; monthly MSCI
data.&nbsp;(Charts showing the prices of emerging markets with
other developed markets, such as Japan and Europe show similar
differences in the two periods.)&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006f.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006e.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">MSCI
STOCK PRICE INDEXES&nbsp; 
( Month to Month % Change)&nbsp;</th>
<th scope="col">Sep 08</th>
<th scope="col">Aug 08&nbsp;</th>
<th scope="col">Jul 08&nbsp;</th>
<th scope="col">Jun&nbsp;08&nbsp;</th>
<th scope="col">May 08&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Emerging Markets</td>
<td>-13.3</td>
<td>-5.7</td>
<td>-8.9</td>
<td>-6.2</td>
<td>3.8</td>
</tr>
<tr>
<td class="firstcol">United States</td>
<td>-5.1</td>
<td>1.0</td>
<td>-6.4</td>
<td>-3.7</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Europe</td>
<td>-8.4</td>
<td>-3.2</td>
<td>-6.6</td>
<td>-6.2</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Japan</td>
<td>-4.4</td>
<td>-5.5</td>
<td>-6.8</td>
<td>-2.0</td>
<td>4.3</td>
</tr>
</tbody>
</table>
</body></html>

Stock prices in Europe, Japan and the emerging markets appear to have moved in lock step with those in North America over the past year as shown in the first chart that plots Morgan Stanley Capital International (MSCI) daily stock [...]

No Place To Hide: Stock Markets In Different Parts Of The World Increasingly Move Together

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006c.jpg" align="left" border="0" height="265" width="353">
As we sit in the middle of a growing financial crisis exchange
rates position countries in specific competitiveness cohorts. Much of
what has transpired in the past few years has been framed importantly
by those exchange rate movements. This is so true that it would be hard
to go back and to decide which caused which to happen: Did high oil
hurt the dollar or did a weak dollar push up oil?

The real broad effective dollar index is down by 13.3% over 36
months. That term means that the index is the dollar&#8217;s value adjusted
for inflation effects against a wide group of currencies in which
weights are applied to reflect the importance of these countries in
trade. The euro is up by 11% on a similar measure and yen is down by
13% over that same period. Currencies are not a zero sum game unless
you include all the world&#8217;s currencies in the framework. The dollar can
move differently Vs different currencies so it could theoretically fall
Vs the euro but rise enough Vs the Canadian dollar (which is more
important in terms of the size of bilateral direct trade flows) to push
the broad US exchange rate index up.

Right now the world crises catches the dollar in the bottom 1%
of its queue of (real) values since 1973. The yen is also low in its
range, in the 2.8 percentile. The euro is strong in the top 98
percentile of its range. And&#8230; what got currencies into these positions
is also partly what got us in trouble.

The EURO shot up and with the ECB focus on its ONE mandate as
it cheered too much for that inflation fighting rise in the exchange
rate as oil prices spurted. Yet it was the euro&#8217;s rise that helped the
dollar to fall and with the world&#8217;s commodity prices denominated in
dollars that helped to stoke up dollar commodity prices. This dynamic
continued to help to push commodity prices as a spiral developed that
included oil- especially oil!

As a result of such polices and currency shifts we find Europe
currently undermined by foreign exchange strength whose lagged effects
are finally taking a toll on EMU members. In the US a weakening US
economy has seen its drop in domestic activity softened by strong US
exports (and weaker imports) due importantly to a weakening and highly
competitive dollar.

In the top chart we plot the broad real effective EMU exchange
rate. Using EMU weights it has been projected backward to before the
time that the EMU existed to show just how strong the euro has become.
When the individual currencies of EMU member countries existed there
was not a time when they collectively were as strong as they got to be
in this cycle. This is why I have been warning for so long that Europe
was going to slow down. Europe is a trading place. And while much of
its trade is intra-Europe that is still not the same as intra-state
shipments within the US. Intra EMU trading does eliminate the need for
foreign exchange and there is a good deal of product homogenization in
Europe but you still are dealing with a foreigner when you ship goods
across national lines within EMU. For that reason a strong external
exchange rate can undermine intra-EMU regional trade more easily than
intra-state trade in the US.

On balance the strong euro is now an added burden for Europe
where fiscal policy is off the table due to its Maastricht budget
constraints. Coordinated programs for troubled banks are harder to get
because of their members&#8217; still-separate fiscal situations. The much
vaunted EMU and EU customs trade union and monetary union are showing
their Achilles Heels. Europe is not one country. It is no united states
of Europe and this fact is one of the main things that has held it back
and that continues to impede its operation in this crisis.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">Trade
weighted FX Broad Real Range and Movements </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Aug-08</td>
<td>US</td>
<td>EMU</td>
<td>Japan</td>
<td>UK</td>
</tr>
<tr>
<td class="firstcol">Current Index</td>
<td>77.6</td>
<td>132.6</td>
<td>68.4</td>
<td>87.8</td>
</tr>
<tr>
<td class="firstcol">Rank percentile</td>
<td>1.2%</td>
<td>98.6%</td>
<td>2.8%</td>
<td>30.6%</td>
</tr>
<tr>
<td class="firstcol">12-Mo %</td>
<td>-6.3%</td>
<td>5.7%</td>
<td>0.4%</td>
<td>-11.8%</td>
</tr>
<tr>
<td class="firstcol">24-Mo %</td>
<td>-9.5%</td>
<td>7.8%</td>
<td>-4.6%</td>
<td>-10.4%</td>
</tr>
<tr>
<td class="firstcol">36-Mo%</td>
<td>-13.3%</td>
<td>11.0%</td>
<td>-13.1%</td>
<td>-9.0%</td>
</tr>
</tbody>
</table>
</body></html>

As we sit in the middle of a growing financial crisis exchange rates position countries in specific competitiveness cohorts. Much of what has transpired in the past few years has been framed importantly by those exchange rate [...]

Exchange Rates Set the Stage…that Policymakers Play On

<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/081006a.jpg" width="353">
The so-called misery index is a constructed U.S. business cycle indicator. It adds the year-to-year change in the CPI to the unemployment rate. Thus, for those who are employed it measures the degree to which their incomes are being eroded by higher prices. For those who are unemployed that erosion hits the diminished level of dollars from an unemployment benefit.
During the past year, the misery index has climbed to 11.5 which was its highest level since early 1991.
The increase during the past year from 6.7 is due to gains in both of the two components of the index, but the 4.8 point jump since August of last year has been more driven by the rise in energy prices. Higher gasoline prices drove the change in the CPI up 3.5 points to 5.4%. Higher unemployment caused the unemployment rate to rise a lesser 1.4 points.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006b.jpg" width="353">
Over the very short term the recent decline in gasoline prices likely will cause the misery index to level out. The CPI&#39;s increase should drop to roughly 4.0%. However, a continued increase in the unemployment rate will offset at least some of that decline. The combination would leave the index still above last year&#39;s average and on a monthly basis near the highest level since 2005.
The misery index can be found in Haver&#39;s USECON database under Business Cycle Indicators.
Oil Prices and Inflation from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-31.pdf"> here</a>.
Back to the Future with Keynes from the Federal Reserve Bank of Minneapolis is available <a href="http://www.minneapolisfed.org/research/QR/QR3212.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/@E8/@E801/@E80101/@E80101.HTM">U.S. Misery Index</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y&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">Misery Index</td>
<td>11.5</td>
<td>11.3</td>
<td>6.7</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; CPI</td>
<td>5.4&nbsp;</td>
<td>5.5</td>
<td>1.9</td>
<td>2.9</td>
<td>3.2</td>
<td>3.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Unemployment Rate</td>
<td>6.1</td>
<td>5.7</td>
<td>4.7</td>
<td>4.6</td>
<td>4.6</td>
<td>5.1</td>
</tr>
</tbody>
</table>
</body>
</html>

The so-called misery index is a constructed U.S. business cycle indicator. It adds the year-to-year change in the CPI to the unemployment rate. Thus, for those who are employed it measures the degree to which their incomes are being [...]

U.S. Misery Index Highest Since 1991

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006a.jpg" align="left" border="0" height="265" width="353">
The so-called misery index is a constructed U.S. business
cycle indicator. It adds the year-to-year change in the CPI to the
unemployment rate. Thus, for those who are employed it measures the
degree to which their incomes are being eroded by higher prices. For
those who are unemployed that erosion hits the diminished level of
dollars from an unemployment benefit.
During the past year, the misery index has climbed to 11.5
which was its highest level since early 1991.
The increase during the past year from 6.7 is due to gains in
both of the two components of the index, but the 4.8 point jump since
August of last year has been more driven by the rise in energy prices.
Higher gasoline prices drove the change in the CPI up 3.5 points to
5.4%. Higher unemployment caused the unemployment rate to rise a lesser
1.4 points.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006b.jpg" align="right" border="0" height="265" width="353">
Over the very short term the recent decline in gasoline prices
likely will cause the misery index to level out. The CPI's increase
should drop to roughly 4.0%. However, a continued increase in the
unemployment rate will offset at least some of that decline. The
combination would leave the index still above last year's average and
on a monthly basis near the highest level since 2005.
The misery index can be found in Haver's USECON
database under Business Cycle Indicators.
Oil Prices and Inflation from
the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-31.pdf">
here</a>.
Back to the Future with Keynes from
the Federal Reserve Bank of Minneapolis is available <a href="http://www.minneapolisfed.org/research/QR/QR3212.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/@E8/@E801/@E80101/@E80101.HTM">U.S.
Misery Index</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y&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">Misery Index</td>
<td>11.5</td>
<td>11.3</td>
<td>6.7</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; CPI</td>
<td>5.4&nbsp;</td>
<td>5.5</td>
<td>1.9</td>
<td>2.9</td>
<td>3.2</td>
<td>3.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Unemployment Rate</td>
<td>6.1</td>
<td>5.7</td>
<td>4.7</td>
<td>4.6</td>
<td>4.6</td>
<td>5.1</td>
</tr>
</tbody>
</table>
Exchange Rates Set the
Stage&#8230;thatPolicymakers Play On 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 6, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006c.jpg" align="left" border="0" height="265" width="353">
As we sit in the middle of a growing financial crisis exchange
rates position countries in specific competitiveness cohorts. Much of
what has transpired in the past few years has been framed importantly
by those exchange rate movements. This is so true that it would be hard
to go back and to decide which caused which to happen: Did high oil
hurt the dollar or did a weak dollar push up oil?

The real broad effective dollar index is down by 13.3% over 36
months. That term means that the index is the dollar&#8217;s value adjusted
for inflation effects against a wide group of currencies in which
weights are applied to reflect the importance of these countries in
trade. The euro is up by 11% on a similar measure and yen is down by
13% over that same period. Currencies are not a zero sum game unless
you include all the world&#8217;s currencies in the framework. The dollar can
move differently Vs different currencies so it could theoretically fall
Vs the euro but rise enough Vs the Canadian dollar (which is more
important in terms of the size of bilateral direct trade flows) to push
the broad US exchange rate index up.

Right now the world crises catches the dollar in the bottom 1%
of its queue of (real) values since 1973. The yen is also low in its
range, in the 2.8 percentile. The euro is strong in the top 98
percentile of its range. And&#8230; what got currencies into these positions
is also partly what got us in trouble.

The EURO shot up and with the ECB focus on its ONE mandate as
it cheered too much for that inflation fighting rise in the exchange
rate as oil prices spurted. Yet it was the euro&#8217;s rise that helped the
dollar to fall and with the world&#8217;s commodity prices denominated in
dollars that helped to stoke up dollar commodity prices. This dynamic
continued to help to push commodity prices as a spiral developed that
included oil- especially oil!

As a result of such polices and currency shifts we find Europe
currently undermined by foreign exchange strength whose lagged effects
are finally taking a toll on EMU members. In the US a weakening US
economy has seen its drop in domestic activity softened by strong US
exports (and weaker imports) due importantly to a weakening and highly
competitive dollar.

In the top chart we plot the broad real effective EMU exchange
rate. Using EMU weights it has been projected backward to before the
time that the EMU existed to show just how strong the euro has become.
When the individual currencies of EMU member countries existed there
was not a time when they collectively were as strong as they got to be
in this cycle. This is why I have been warning for so long that Europe
was going to slow down. Europe is a trading place. And while much of
its trade is intra-Europe that is still not the same as intra-state
shipments within the US. Intra EMU trading does eliminate the need for
foreign exchange and there is a good deal of product homogenization in
Europe but you still are dealing with a foreigner when you ship goods
across national lines within EMU. For that reason a strong external
exchange rate can undermine intra-EMU regional trade more easily than
intra-state trade in the US.

On balance the strong euro is now an added burden for Europe
where fiscal policy is off the table due to its Maastricht budget
constraints. Coordinated programs for troubled banks are harder to get
because of their members&#8217; still-separate fiscal situations. The much
vaunted EMU and EU customs trade union and monetary union are showing
their Achilles Heels. Europe is not one country. It is no united states
of Europe and this fact is one of the main things that has held it back
and that continues to impede its operation in this crisis.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">Trade
weighted FX Broad Real Range and Movements </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Aug-08</td>
<td>US</td>
<td>EMU</td>
<td>Japan</td>
<td>UK</td>
</tr>
<tr>
<td class="firstcol">Current Index</td>
<td>77.6</td>
<td>132.6</td>
<td>68.4</td>
<td>87.8</td>
</tr>
<tr>
<td class="firstcol">Rank percentile</td>
<td>1.2%</td>
<td>98.6%</td>
<td>2.8%</td>
<td>30.6%</td>
</tr>
<tr>
<td class="firstcol">12-Mo %</td>
<td>-6.3%</td>
<td>5.7%</td>
<td>0.4%</td>
<td>-11.8%</td>
</tr>
<tr>
<td class="firstcol">24-Mo %</td>
<td>-9.5%</td>
<td>7.8%</td>
<td>-4.6%</td>
<td>-10.4%</td>
</tr>
<tr>
<td class="firstcol">36-Mo%</td>
<td>-13.3%</td>
<td>11.0%</td>
<td>-13.1%</td>
<td>-9.0%</td>
</tr>
</tbody>
</table>
No Place To Hide: Stock Markets In
Different Parts Of The World Increasingly Move Together 
by <a href="/comment/Curley.html">Louise
Curley</a> October 6, 2008


 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006d.jpg" align="left" border="0" height="265" width="353">
Stock prices in Europe, Japan and the emerging markets
appear to have moved in lock step with those in North America over the
past year as shown in the first chart that plots Morgan Stanley Capital
International (MSCI) daily stock prices.&nbsp; This is in contrast
to earlier periods when it was possible to reduce risk by geographic
diversification, particularly into the emerging
markets.&nbsp;
&nbsp;When emerging markets began to be a
significant factor in the universe of world's stock markets, their
stock prices tended to move independently of those in the developed
markets.&nbsp; From May 1995 to December, 2001, the correlation
between the stock prices of the emerging markets and those of North
America, for example, was .46 as shown in the second chart.&nbsp;
The&nbsp; R2 = .21, means that only 21% of
the change in one market affected the other market. Since then the
prices of the two stock markets have tended to move together. The third
chart shows that the correlation between the two series from January
2002 to the present has risen to .96, with an R2&nbsp;
= .92, indicating that 92% of the change in one markets affected the
other market. These charts are based on the&nbsp; monthly MSCI
data.&nbsp;(Charts showing the prices of emerging markets with
other developed markets, such as Japan and Europe show similar
differences in the two periods.)&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006f.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081006e.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">MSCI
STOCK PRICE INDEXES&nbsp; 
( Month to Month % Change)&nbsp;</th>
<th scope="col">Sep 08</th>
<th scope="col">Aug 08&nbsp;</th>
<th scope="col">Jul 08&nbsp;</th>
<th scope="col">Jun&nbsp;08&nbsp;</th>
<th scope="col">May 08&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Emerging Markets</td>
<td>-13.3</td>
<td>-5.7</td>
<td>-8.9</td>
<td>-6.2</td>
<td>3.8</td>
</tr>
<tr>
<td class="firstcol">United States</td>
<td>-5.1</td>
<td>1.0</td>
<td>-6.4</td>
<td>-3.7</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Europe</td>
<td>-8.4</td>
<td>-3.2</td>
<td>-6.6</td>
<td>-6.2</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Japan</td>
<td>-4.4</td>
<td>-5.5</td>
<td>-6.8</td>
<td>-2.0</td>
<td>4.3</td>
</tr>
</tbody>
</table>
</body></html>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081003f.jpg" align="left" border="0" height="265" width="353">
Retail sales in the Euro Area rose in August. The rise was
small but it marks the second monthly rise in a row. Still the growth
rates over 3 months, 6 months and 12 months are all hovering in the -2%
range (saar) for the Area. The
bottom of the table shows country by country results for Germany, Italy
and the UK. The volatility in country level sales has been substantial.
Germany saw sales volume spurt by 4.1% (ex-auto) in August. UK sales
volume rose by 1.2%. Still over three months UK sales are off at an
8.1% annual rate. German sales over three months are up at a +2.4%
pace. There is a lot of volatility in Europe. While this report seems
to show some resiliency, consumer plans to buy still seem to be skewed
sharply lower (see chart). Consumer
sentiment remains weak and the industrial sectors across Europe are
still weakening. The rise in retail sales in August seems to be more of
an anomaly than proof of resiliency.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Euro Area 15&nbsp; Retail Sales Volume </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Aug-08</td>
<td>Jul-08</td>
<td>Jun-08</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro Area 15 Total</td>
<td>0.3%</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-1.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food</td>
<td>0.7%</td>
<td>-0.5%</td>
<td>-0.7%</td>
<td>-2.0%</td>
<td>-2.6%</td>
<td>-2.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Nonfood</td>
<td>0.1%</td>
<td>0.5%</td>
<td>-0.9%</td>
<td>-1.0%</td>
<td>-1.5%</td>
<td>-1.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Textiles</td>
<td>#N/A</td>
<td>2.4%</td>
<td>-2.7%</td>
<td>24.9%</td>
<td>-0.2%</td>
<td>-0.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Books, news, etc</td>
<td>#N/A</td>
<td>1.0%</td>
<td>-1.1%</td>
<td>-1.1%</td>
<td>-2.4%</td>
<td>-0.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Pharmaceutical</td>
<td>#N/A</td>
<td>0.0%</td>
<td>0.5%</td>
<td>0.6%</td>
<td>0.8%</td>
<td>1.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other nonspecialized stores</td>
<td>#N/A</td>
<td>1.1%</td>
<td>-1.8%</td>
<td>-0.7%</td>
<td>-2.0%</td>
<td>-1.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Mail Order</td>
<td>#N/A</td>
<td>2.9%</td>
<td>-1.3%</td>
<td>2.7%</td>
<td>-0.3%</td>
<td>0.1%</td>
</tr>
<tr class="grey4">
<td colspan="7" class="firstcol">Country detail;Volume</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany: Vol ex Auto</td>
<td>3.1%</td>
<td>-1.0%</td>
<td>-1.5%</td>
<td>2.4%</td>
<td>-0.6%</td>
<td>0.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy (Total; Value)</td>
<td>#N/A</td>
<td>0.6%</td>
<td>-0.4%</td>
<td>1.8%</td>
<td>0.4%</td>
<td>0.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK (EU):Vol</td>
<td>1.2%</td>
<td>0.9%</td>
<td>-4.2%</td>
<td>-8.1%</td>
<td>1.9%</td>
<td>3.4%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">Shaded areas calculated on a
one-month lag due to lagging data</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">The EA 15 countries are Austria,
Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Malta, Netherlands, Portugal, Slovenia and Spain.</td>
</tr>
</tbody>
</table>
</body></html>

Retail sales in the Euro Area rose in August. The rise was small but it marks the second monthly rise in a row. Still the growth rates over 3 months, 6 months and 12 months are all hovering in the -2% range (saar) for the Area. The [...]

Consumer Spending and Purchase Plans in EMU

<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/081003d.jpg" width="353">
The September Composite Index for the nonmanufacturing sector from the Institute for Supply Management slipped to 50.2 from an unrevised 50.6 during August. The figure about matched Consensus expectations.
The nonmanufacturing business activity sub-index, however, rose to 52.1 which was its highest level since May. Since the series&#39; inception in 1997 there has been a 48% correlation between the level of the business activity index for the nonmanufacturing sector and the Q/Q change in real GDP for the services and the construction sectors.
The new orders sub-index also rose last month to 50.8 which was the highest level since May.
The employment index, conversely, fell m/m to 44.2 which was the lowest level since June. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM nonmanufacturing employment index and the m/m change in payroll employment in the service-producing plus the construction industries.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081003e.jpg" width="353">
Pricing power also slipped to 70.0 which was its lowest level since March. Since inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report On Business</cite>&reg;, the composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. It is a composite index based on the diffusion indexes for four of the indicators (business activity, new orders, employment and supplier deliveries) with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
ISM surveys more than 370 purchasing managers in more than 62 industries including law firms, hospitals, government and retailers. The nonmanufacturing survey dates back to July 1997.

<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">September</th>
<th scope="col">August</th>
<th scope="col">September &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>50.2</td>
<td>50.6</td>
<td>53.2</td>
<td>53.5</td>
<td>55.7</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.0</td>
<td>72.9</td>
<td>65.0</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>


</html>

The September Composite Index for the nonmanufacturing sector from the Institute for Supply Management slipped to 50.2 from an unrevised 50.6 during August. The figure about matched Consensus expectations. The nonmanufacturing [...]

U.S. ISM Nonmanufacturing Index Down Slightly Along With Prices

<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/081003a.jpg" width="353">
Nonfarm payrolls declined 159,000 during September, according to the Bureau of Labor Statistics. The latest decline was the largest during each of the last nine months and it exceeded Consensus expectations for a 105,000. It was accompanied by modest revisions to prior months&#39; figures. Payrolls have fallen by 760,000, or by 0.6%, this year.The latest figures were depressed by Hurricanes Gustav &amp; Ike.
During the last three months payrolls fell at a 0.9% annual rate. That is the quickest rate of decline during this cycle but it compares to a rate in excess of -2.0% by the end of the 2001 recession.
The length of the average workweek slipped to 33.6 hours. Combined with recent declines in employment, an unchanged workweek for 3Q versus 2Q left aggregate hours-worked down at a 2.0% rate last quarter. That suggests no growth in real 3Q GDP assuming a 2.0% rate of advance in worker productivity.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081003b.jpg" width="353">
The unemployment rate held steady at 6.1% last month and that equaled expectations. Nevertheless, it was the highest level since September of 2003.
Household sector employment fell 222,000 (-0.7% y/y) after an unrevised 342,000 worker August decline. It was the seventh monthly decline this year. The level of the unemployed rose 101,000 (30.8% y/y) following a 592,000 August increase. The labor force fell 121,000 (+0.8% y/y) during September. The labor force participation rate slipped to 66.0% after three months at 6.1%. It was 66.0% during all of last year and 66.2% in 2006. The participation rate amongst adult men was unchanged at 75.8%, about the same as averaged last year, but amongst adult women, it fell to 60.8% which near the lowest level this year.
The average duration of unemployment increased by one full week to 18.4. The median duration of unemployment, however, rose to a lesser 10.2 weeks, up from 8.5 weeks during all of last year. The number of those unemployed for more than 27 weeks increased 9.1% (56.9% y/y), about as it did during August.
From the establishment survey, the number of private sector jobs fell 168,000 (-0.7% y/y). Private service sector industries fell 91,000 (0.0% y/y), the largest decline since early 2003. Nevertheless, September logged the eighth decline, and the largest, in the last nine months. Employment in trade, transportation &amp; utilities fell by 58,000 (-1.3% y/y). Retail sector jobs plunged 41,100 (-1.6% y/y) with motor vehicle &amp; parts dealers accounting for roughly a quarter of the decline. Jobs in the information sector fell 3,000 last month (-1.7% y/y) while financial sector jobs fell 17,000 (-1.3% y/y). The professional &amp; business service industry shed 27,000 (0.9% y/y) jobs. Temporary help services jobs which often are a leading indicator of employment growth, fell 24,100 (-9.1% y/y). These declines were somewhat offset by continued positive employment growth in the education &amp; health industries, up 25,000 (3.1% y/y) during September.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081003c.jpg" width="353">
Factory sector jobs fell 51,000 after a 56,000 worker decline during August (-3.2% y/y). Motor vehicle &amp; parts jobs fell 18,200 (-14.1% y/y) but computer &amp; electronic product jobs were unchanged (-0.9% y/y). In the nondurables sector employment fell 14,000 (-2.3% y/y).
Construction sector employment fell another 35,000 during September which was the largest decline in three months.
Government sector jobs moved higher by 9,000 (1.4% y/y) led by a 5,000 (1.4% y/y) worker increase in state government hiring. Federal government hiring rose by 3,000 (1.1% y/y) while local governments added 1,000 (1.5% y/y) workers.
The one month diffusion index, which measures the breadth of job gain or loss (50 is the break-even level), fell to its lowest level of this cycle (38.1%). The three-month index also was at its cycle low (36.1%) and the three-month figure for the factory sector was even weaker at 20.8%.
Average hourly earnings rose just 0.2%. Factory sector earnings reversed their August decline and rose 0.2% (2.6% y/y) while private service sector earnings also rose 0.2% (3.4% y/y).

<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/@EB/@EB01/@EB01.HTM">Employment: 000s</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</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">Payroll Employment</td>
<td>-159</td>
<td>-73</td>
<td>-67</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>-84</td>
<td>-60</td>
<td>--</td>
<td>1.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-51</td>
<td>-56</td>
<td>-40</td>
<td>-3.2%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-35</td>
<td>-31</td>
<td>-23</td>
<td>-6.1%</td>
<td>-1.0%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.6</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8 (Sept. &#39;07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>6.1%</td>
<td>6.1%</td>
<td>5.7%</td>
<td>4.7% (Sept. &#39;07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

Nonfarm payrolls declined 159,000 during September, according to the Bureau of Labor Statistics. The latest decline was the largest during each of the last nine months and it exceeded Consensus expectations for a 105,000. It was [...]

Largest Decline in U.S. Payrolls Since Early 2003

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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

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


Privacy Policy

Disclaimer

Contact us

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

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

250502A5.jpg

250502B5.jpg

Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.8% in April from 7.9% in March.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

250502C5.jpg

250502D5.jpg

The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

250502X5.jpg

250502F5.jpg

- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

250502F32.jpg

250502G32.jpg

Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

250502H32.jpg

250502I32.jpg

- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

250502E.jpg

The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

250502.jpg

Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

250501Z4.jpg

**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

250501Z5.jpg

**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

250501Z6.jpg

Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3PzXXKrkHcwtOLipohEdnB?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

250501H20.jpg

250501I20.jpg

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

Economy in Brief: October 2008

Jump to:

U.S. Gasoline Prices Fell toLowest Since April, Demand Growth Lowest Since 1997

No Place To Hide: Stock Markets In Different Parts Of The World Increasingly Move Together

Exchange Rates Set the Stage…that Policymakers Play On

U.S. Misery Index Highest Since 1991

U.S. Misery Index Highest Since 1991

Consumer Spending and Purchase Plans in EMU

U.S. ISM Nonmanufacturing Index Down Slightly Along With Prices

Largest Decline in U.S. Payrolls Since Early 2003