Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090309b.jpg" align="left" border="0" height="265" width="353">
Japan recorded a current account deficit in January of $172.8
billion yen, due largely to the collapse in exports. Exports of goods
declined by 1309.6 billion yen in January and were 2830.6 billion yen
below a year ago. Imports declined 663.2 billion yen in January and
were 1914.9 billion yen below January, 2008. The resulting deficit on
goods was 844.4 billion yen in January, compared with 197.9 billion yen
in December and a surplus of 71.3 in January, 2008. The balance between
income from foreign sources and payments to these sources increased
from 924.2 billion yen in December to 992.4 billion yen in January but
was substantially below the 1,448.4 billion yen of January, 2009. The
deficit on services in January was 255.8 billion yen, little changed
from the 251.6 billion yen of a year ago. The deficit on current
transfers was 65.0 billion yen, down from the 104.4 deficit of January
2008. The first chart shows the importance of the recent decline in the
balance on goods in the decline of the current account.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090309c.jpg" align="right" border="0" height="265" width="353">
January is typically a low month for the current account
balance, as can be seen in the second chart, which shows both the
seasonally unadjusted and adjusted data. After seasonal adjustment, the
data for the current account show a surplus of 259.0 billion yen for
January. This surplus is, however, the lowest recorded since the early
nineties, as can be seen in the second chart, just as the deficit in
the unadjusted data was the highest.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">JAPAN
CURRENT ACCOUNT (100 Mil Yen)</th>
<th scope="col">Jan 09</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Jan&nbsp; 08&nbsp;</th>
<th scope="col">M/M CHG&nbsp;</th>
<th scope="col">Y/Y CHG</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total NSA&nbsp;</td>
<td>-1728</td>
<td>1254</td>
<td>11637</td>
<td>-2982</td>
<td>-13365</td>
<td>162802</td>
<td>247938</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods</td>
<td>-8444</td>
<td>-1929</td>
<td>+713</td>
<td>-6465</td>
<td>-9157</td>
<td>40337</td>
<td>123225</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports</td>
<td>32822</td>
<td>45920</td>
<td>61128</td>
<td>-13096</td>
<td>-28306</td>
<td>773522</td>
<td>797254</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports</td>
<td>41266</td>
<td>47266</td>
<td>60415</td>
<td>-6632</td>
<td>-19149</td>
<td>733183</td>
<td>674030</td>
</tr>
<tr class="even">
<td class="firstcol">Services&nbsp;</td>
<td>-2558</td>
<td>-3217</td>
<td>-2516</td>
<td>659</td>
<td>-42</td>
<td>-22366</td>
<td>-24971</td>
</tr>
<tr>
<td class="firstcol">Income</td>
<td>9924</td>
<td>7242</td>
<td>14484</td>
<td>2682</td>
<td>-4560</td>
<td>158324</td>
<td>163267</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Transfers</td>
<td>-650</td>
<td>-793</td>
<td>-1044</td>
<td>143</td>
<td>394</td>
<td>-13497</td>
<td>-13580</td>
</tr>
<tr class="odd">
<td class="firstcol">Total SA</td>
<td>2580</td>
<td>5570</td>
<td>18059</td>
<td>-2990</td>
<td>-15478</td>
<td>162599</td>
<td>250661</td>
</tr>
</tbody>
</table>
 Some Further Rebounding from
Japan's Economy Watchers
Index 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 9 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090309a.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s economy watchers index is making further tentative
signs of rebounding from its very deep cyclical lows in this cycle. The
future index has made a more substantial bounced higher, but the
current index is rising too. The future index is still in the bottom
22% of its five year range. The headline index is only in the 8.5%
percentile of its range. But any improvement begins from where you are.
In December each of these measures was at a five year low. So this is
what the early signs of progress look like. It is too soon to take the
positive moves in these signs to the bank. But I think we have been
very oversold in markets and that commentators have been pessimistic
beyond what prudence would call for. Japan&#8217;s early signs join some from
the US that say conditions are not now getting worse. This may well be
among the first tentative steps on the road to eventual recovery. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Key
Japanese surveys</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="4">Raw readings of each survey</td>
<td colspan="3">Percent of 5Yr range*</td>
</tr>
<tr class="grey4">
<td class="firstcol">Diffusion</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
</tr>
<tr class="grey3">
<td class="firstcol">Economy Watchers</td>
<td>19.4</td>
<td>17.1</td>
<td>15.9</td>
<td>21.0</td>
<td>8.5%</td>
<td>2.9%</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Employment</td>
<td>11.9</td>
<td>10.1</td>
<td>8.5</td>
<td>15.7</td>
<td>5.9%</td>
<td>2.8%</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Future</td>
<td>26.5</td>
<td>22.1</td>
<td>17.6</td>
<td>24.7</td>
<td>22.8%</td>
<td>11.5%</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">NTC MFG</td>
<td>31.6</td>
<td>29.6</td>
<td>30.8</td>
<td>36.7</td>
<td>7.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td colspan="8">Econ Trends (Teikoku'/50
neutral/weighted diffusion)</td>
</tr>
<tr class="grey1">
<td class="firstcol">MFG</td>
<td>17.0</td>
<td>17.7</td>
<td>19.3</td>
<td>24.5</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Retail</td>
<td>20.5</td>
<td>21.6</td>
<td>21.3</td>
<td>24.4</td>
<td>0.0%</td>
<td>1.5%</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Wholesale</td>
<td>18.4</td>
<td>19.0</td>
<td>20.4</td>
<td>24.7</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Services</td>
<td>22.6</td>
<td>23.3</td>
<td>24.1</td>
<td>28.4</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Construction</td>
<td>18.2</td>
<td>18.6</td>
<td>19.1</td>
<td>21.4</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="8">100 is high; Zero is low</td>
</tr>
</tbody>
</table>
</body></html>

Japan recorded a current account deficit in January of $172.8 billion yen, due largely to the collapse in exports. Exports of goods declined by 1309.6 billion yen in January and were 2830.6 billion yen below a year ago. Imports [...]

Japan Starts 2009 with a CurrentAccount Deficit

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306d.jpg" align="left" border="0" height="265" width="353">
The plunge in the US, Japan and European LEIs is quite
characteristic of recession as the chart on top demonstrates. However,
the severity of the declines is unusual. In the past 40-Years only the
1973-75 downturn produced larger declines for the US. Japan&#8217;s decline
is already steeper than its 1973-75 recession drop; Europe&#8217;s is about
the same and the US drop is not (yet?) as severe. 
 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306e.jpg" align="right" border="0" height="265" width="353">
However the OECD framework shows that the declines across most
regions are accelerating. Across 6-mo intervals all the main groups are
declining increasingly rapidly over each of the last two six month
segments (bottom panel of table). Separate progressive growth rates
(top panel of table) show that that over three months the growth rate
in Europe has showed some recovery compared to its performance over six
months. But that &#8216;improvement&#8217; is not by much. 
 

The chart below shows that the OECD and US Conference Board
indices (LEIs) have different views of the US situation. In past deep
downturns the Conference Board index fell by more. In this episode- -
at least at this point of the downturn &#8211; the OECD index is showing a
substantially sharper US decline and one that is accelerating instead
of moderating as in the US treatment from the Conference Board Index. 
 
 
 

On balance the OECD signal for the US is much worse than from
the US own LEI that has actually stated to turn up (less down) in
January. More topical data from Europe for February suggests that
conditions there continue to weaken. The LEI signal is not infallible
and may not always give the most prescient look ahead. But it is only
one index- a single number- and only so much can be expected from it.
History is quite kind to the LEI gauge as the frame work has a very
good and consistent cyclical signal. For the moment the message is
quite clear that the OECD is not signaling that the worst is over. It
is signaling that we are still in the middle of a difficult and severe
downturn- quite severe by the standards of the past 40 years &#8211; and that
continued vigilance is recommended. It&#8217;s a very good thing that the ECB
joined the BOE in rate cuts this past week. Clearly the cut was needed. 
 

As for the US discrepancy in the LEI signals that obviously
bears some watching. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col"> OECD
Trend-restored leading Indicators</th>
</tr>
<tr>
<th colspan="5" cope="col">Growth
progression-SAAR</th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> 3Mos</td>
<td> 6Mos</td>
<td> 12mos</td>
<td> Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td> -12.8%</td>
<td> -9.9%</td>
<td> -5.6%</td>
<td> 1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td> -14.7%</td>
<td> -11.3%</td>
<td> -6.6%</td>
<td> 0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD. Eur</td>
<td> -11.3%</td>
<td> -9.5%</td>
<td> -6.0%</td>
<td> 1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD. Japan</td>
<td> -14.1%</td>
<td> -9.9%</td>
<td> -4.0%</td>
<td> -1.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td> -17.4%</td>
<td> -12.8%</td>
<td> -7.6%</td>
<td> 1.2%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol"> Six month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Recent six</td>
<td> 6Mo Ago</td>
<td> 12Mo Ago</td>
<td> 18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td> -9.9%</td>
<td> -1.1%</td>
<td> -0.3%</td>
<td>3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td> -11.3%</td>
<td> -1.6%</td>
<td> -1.1%</td>
<td>2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD. Eur</td>
<td> -9.5%</td>
<td> -2.2%</td>
<td> 0.5%</td>
<td> 2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD. Japan</td>
<td> -9.9%</td>
<td>2.2%</td>
<td> -2.6%</td>
<td> -1.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td> -12.8%</td>
<td> -2.1%</td>
<td> -1.4%</td>
<td>3.8%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol"> Slowdowns indicated by
BOLD RED</td>
</tr>
</tbody>
</table>
</body></html>

The plunge in the US, Japan and European LEIs is quite characteristic of recession as the chart on top demonstrates. However, the severity of the declines is unusual. In the past 40-Years only the 1973-75 downturn produced larger [...]

OECD LEI's Show Severe And Worsening Downturn

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306a.jpg" width="353">
Hemorrhaging of workers continued last month in the U.S. labor market according to the Bureau of Labor Statistics. The unemployment rate jumped to 8.1% which was the highest level since December of 1983. The rate increase exceeded Consensus expectations of 7.9%. The latest rise was forced by a 351,000 drop in household employment (-3.0% y/y) that followed the plummet of 1,239,000 during January. The labor force recovered 498,000 (0.5% y/y) after a sharp January decline.
The labor force participation rate held roughly steady at 65.6%, close to its lowest since 1987. However, the number of potential workers who were not in labor force but wanted a job, i.e. the &quot;discouraged worker,&quot; rose by 18.2% y/y. Overall, the number of those who were unemployed last month rose 851,000. The figure was up 5.0 million, or 68.0%, during the last twelve months.
The average duration of unemployment held steady at 19.8 weeks, near the highest since 1983. The number of those unemployed for more than 27 weeks rose another 10.2%, more than doubling year-to-year.
From the establishment survey, nonfarm payrolls were slashed in February by near the most for any one month since 1949. The 651,000 cut followed declines during the prior two months that were much deeper than reported earlier (see table below). The February decline about matched Consensus expectations.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306b.jpg" width="353">
Aggregate hours worked (employment time hours) fell 0.7% last month after a 0.6% January decline. So far in the first quarter aggregate hours worked are down at a 6.9% annual rate from 4Q08.
Private service sector employment dropped 384,000, close to the largest drop for any one month during the last 60 years. Over the last three months 1,431,000 jobs were shed, or 1.5% of the total. During that period 446,000 jobs (-2.6%) were lost from the professional &amp; business services sector and 129,000 jobs (-1.6%) were lost from the financial services sector. The leisure &amp; hospitality industry shed 102,000 jobs (-0.8%) during the last three months and 166,100 were cut (-1.1%) from the retail sector, close to the largest drop since 1958. About the only sector to show growth in jobs was health services where jobs rose 80,600 during the last three months, or by 0.6%. Jobs in education also rose a moderate 13,200 during that period (0.4%).
Factory sector jobs fell 168,000 last month and they have fallen 1,215,000 over the last twelve months (-8.9%). Production worker employment fell by 10.7% during that period with motor vehicle employment down 24.7% and furniture jobs down 17.7%. In the apparel sector, jobs fell 13.1% during the last twelve months.
Construction sector employment fell another 104,000 during February and over the last three months alone 320,000 jobs were cut, or by 4.6%. Hardest hit was the residential building sector where 43,400 jobs (-5.6%) were lost over the last three months alone. Over the last twelve months 826,000 jobs were shed (-11.1%) from the construction sector overall.
Comparing Current Payroll Employment Changes with Past Recessions from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/research/trends/2008/1108/04ecoact.cfm">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306c.jpg" width="353">
The weakness in private sector hiring has been barely dented by job gains in the government sector where payrolls rose 9,000 last month last month (0.7% y/y). Moreover, there has been no net-hiring by governments since this past summer. State &amp; local government hiring has been slightly negative since the summer while hiring by the federal government rose slightly.
The length of the average workweek remained stable during February at the reduced level of 33.3 hours. It continued as the shortest workweek on record and was down by five hours from the peak during the mid-1960s.
The one month diffusion index, which measures the breadth of job gain or loss (50 is the break-even level) remained near its lowest level of this cycle (23.8%). The three-month index reached a new cycle low of 16.8%. The three-month figure for the factory sector continued weaker at 5.4%.
Average hourly earnings rose 0.2% and that matched Consensus expectations. Earnings the construction industry fell 0.5% (+4.0% y/y) while in the factory sector they rose 0.5% (3.1% y/y) as employers held on to their most productive workers. Private services wages rose 0.5% (4.1% y/y).
The figures referenced above are available in Haver&#39;s USECON database. Additional detail can be found in the LABOR and in the EMPL databases.
American International Group is yesterday&#39;s testimony by Fed Vice Chairman Donald L Kohn and it is available <a href="http://www.federalreserve.gov/newsevents/testimony/kohn20090305a.htm">here</a>.
Credit Market Competition and the Nature of Firms from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr366.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/@EB/@EB01/@EB01.HTM">Employment: 000s</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-651</td>
<td>-655</td>
<td>-681</td>
<td>-3.0%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>-577</td>
<td>-597</td>
<td>--</td>
<td>-0.3%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-168</td>
<td>-257</td>
<td>-180</td>
<td>-8.9%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-104</td>
<td>-118</td>
<td>-98</td>
<td>-11.1%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-375</td>
<td>-276</td>
<td>-399</td>
<td>-1.9%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.3</td>
<td>33.3</td>
<td>33.3</td>
<td>33.8 (Feb. &#39;08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.6%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>8.1%</td>
<td>7.6%</td>
<td>7.2%</td>
<td>4.8% Feb. &#39;08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body>
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Hemorrhaging of workers continued last month in the U.S. labor market according to the Bureau of Labor Statistics. The unemployment rate jumped to 8.1% which was the highest level since December of 1983. The rate increase exceeded [...]

U.S. Unemployment Rate of 8.1% Highest Since 1983. Payroll Loss Near the Biggest Since 1949

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306a.jpg" align="left" border="0" height="265" width="353">
Hemorrhaging of workers continued last month in the U.S. labor
market according to the Bureau of Labor Statistics. The unemployment
rate jumped to 8.1% which was the highest level since
December of 1983. The rate increase exceeded Consensus expectations of
7.9%. The latest rise was forced by a 351,000 drop in household
employment (-3.0% y/y) that followed the plummet of 1,239,000 during
January. The labor force recovered 498,000 (0.5% y/y) after a sharp
January decline.
The labor force participation rate held roughly steady at
65.6%, close to its lowest since 1987. However, the number of potential
workers who were not in labor force but wanted a job, i.e. the
"discouraged worker," rose by 18.2% y/y. Overall, the number of those
who were unemployed last month rose 851,000. The figure was up 5.0
million, or 68.0%, during the last twelve months.
The average duration of unemployment held steady at 19.8
weeks, near the highest since 1983. The number of those unemployed for
more than 27 weeks rose another 10.2%, more than doubling year-to-year.
From the establishment survey, nonfarm payrolls were slashed
in February by near the most for any one month since 1949. The 651,000
cut followed declines during the prior two months that were much deeper
than reported earlier (see table below). The February decline about
matched Consensus expectations.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306b.jpg" align="right" border="0" height="265" width="353">
Aggregate hours worked (employment time hours) fell 0.7% last
month after a 0.6% January decline. So far in the first quarter
aggregate hours worked are down at a 6.9% annual rate from 4Q08.
Private service sector employment dropped 384,000, close to
the largest drop for any one month during the last 60 years. Over the
last three months 1,431,000 jobs were shed, or 1.5% of the total.
During that period 446,000 jobs (-2.6%) were lost from the professional
&amp; business services sector and 129,000 jobs (-1.6%) were lost
from the financial services sector. The leisure &amp; hospitality
industry shed 102,000 jobs (-0.8%) during the last three months and
166,100 were cut (-1.1%) from the retail sector, close to the largest
drop since 1958. About the only sector to show growth in jobs was
health services where jobs rose 80,600 during the last three months, or
by 0.6%. Jobs in education also rose a moderate 13,200 during that
period (0.4%).
Factory sector jobs fell 168,000 last month and they have
fallen 1,215,000 over the last twelve months (-8.9%). Production worker
employment fell by 10.7% during that period with motor vehicle
employment down 24.7% and furniture jobs down 17.7%. In the apparel
sector, jobs fell 13.1% during the last twelve months.
Construction sector employment fell another 104,000 during
February and over the last three months alone 320,000 jobs were cut, or
by 4.6%. Hardest hit was the residential building sector where 43,400
jobs (-5.6%) were lost over the last three months alone. Over the last
twelve months 826,000 jobs were shed (-11.1%) from the construction
sector overall.
Comparing Current Payroll Employment Changes with
Past Recessions from the Federal Reserve Bank of Cleveland
is available <a href="http://www.clevelandfed.org/research/trends/2008/1108/04ecoact.cfm">here</a>.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306c.jpg" align="left" border="0" height="265" width="353">
The weakness in private sector hiring has been barely dented
by job gains in the government sector where payrolls rose 9,000 last
month last month (0.7% y/y). Moreover, there has been no net-hiring by
governments since this past summer. State &amp; local government
hiring has been slightly negative since the summer while hiring by the
federal government rose slightly.
The length of the average workweek remained stable during
February at the reduced level of 33.3 hours. It continued as the
shortest workweek on record and was down by five hours from the peak
during the mid-1960s.
The one month diffusion index, which
measures the breadth of job gain or loss (50 is the break-even level)
remained near its lowest level of this cycle (23.8%). The three-month
index reached a new cycle low of 16.8%. The three-month figure for the
factory sector continued weaker at 5.4%.
Average hourly earnings rose 0.2% and that
matched Consensus expectations. Earnings the construction industry fell
0.5% (+4.0% y/y) while in the factory sector they rose 0.5% (3.1% y/y)
as employers held on to their most productive workers. Private services
wages rose 0.5% (4.1% y/y).
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
American International Group is yesterday's
testimony by Fed Vice Chairman Donald L Kohn and it is available <a href="http://www.federalreserve.gov/newsevents/testimony/kohn20090305a.htm">here</a>.
Credit Market Competition and the Nature of Firms
from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr366.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/@EB/@EB01/@EB01.HTM">Employment:
000s</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-651</td>
<td>-655</td>
<td>-681</td>
<td>-3.0%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-577</td>
<td>-597</td>
<td>--</td>
<td>-0.3%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-168</td>
<td>-257</td>
<td>-180</td>
<td>-8.9%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-104</td>
<td>-118</td>
<td>-98</td>
<td>-11.1%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-375</td>
<td>-276</td>
<td>-399</td>
<td>-1.9%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.3</td>
<td>33.3</td>
<td>33.3</td>
<td>33.8 (Feb. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.6%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>8.1%</td>
<td>7.6%</td>
<td>7.2%</td>
<td>4.8% Feb. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
OECD LEI's Show Severe And
Worsening Downturn 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 6, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306d.jpg" align="left" border="0" height="265" width="353">
The plunge in the US, Japan and European LEIs is quite
characteristic of recession as the chart on top demonstrates. However,
the severity of the declines is unusual. In the past 40-Years only the
1973-75 downturn produced larger declines for the US. Japan&#8217;s decline
is already steeper than its 1973-75 recession drop; Europe&#8217;s is about
the same and the US drop is not (yet?) as severe. 
 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090306e.jpg" align="right" border="0" height="265" width="353">
However the OECD framework shows that the declines across most
regions are accelerating. Across 6-mo intervals all the main groups are
declining increasingly rapidly over each of the last two six month
segments (bottom panel of table). Separate progressive growth rates
(top panel of table) show that that over three months the growth rate
in Europe has showed some recovery compared to its performance over six
months. But that &#8216;improvement&#8217; is not by much. 
 

The chart below shows that the OECD and US Conference Board
indices (LEIs) have different views of the US situation. In past deep
downturns the Conference Board index fell by more. In this episode- -
at least at this point of the downturn &#8211; the OECD index is showing a
substantially sharper US decline and one that is accelerating instead
of moderating as in the US treatment from the Conference Board Index. 
 
 
 

On balance the OECD signal for the US is much worse than from
the US own LEI that has actually stated to turn up (less down) in
January. More topical data from Europe for February suggests that
conditions there continue to weaken. The LEI signal is not infallible
and may not always give the most prescient look ahead. But it is only
one index- a single number- and only so much can be expected from it.
History is quite kind to the LEI gauge as the frame work has a very
good and consistent cyclical signal. For the moment the message is
quite clear that the OECD is not signaling that the worst is over. It
is signaling that we are still in the middle of a difficult and severe
downturn- quite severe by the standards of the past 40 years &#8211; and that
continued vigilance is recommended. It&#8217;s a very good thing that the ECB
joined the BOE in rate cuts this past week. Clearly the cut was needed. 
 

As for the US discrepancy in the LEI signals that obviously
bears some watching. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col"> OECD
Trend-restored leading Indicators</th>
</tr>
<tr>
<th colspan="5" cope="col">Growth
progression-SAAR</th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> 3Mos</td>
<td> 6Mos</td>
<td> 12mos</td>
<td> Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td> -12.8%</td>
<td> -9.9%</td>
<td> -5.6%</td>
<td> 1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td> -14.7%</td>
<td> -11.3%</td>
<td> -6.6%</td>
<td> 0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD. Eur</td>
<td> -11.3%</td>
<td> -9.5%</td>
<td> -6.0%</td>
<td> 1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD. Japan</td>
<td> -14.1%</td>
<td> -9.9%</td>
<td> -4.0%</td>
<td> -1.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td> -17.4%</td>
<td> -12.8%</td>
<td> -7.6%</td>
<td> 1.2%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">
Six month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Recent six</td>
<td> 6Mo Ago</td>
<td> 12Mo Ago</td>
<td> 18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td> -9.9%</td>
<td> -1.1%</td>
<td> -0.3%</td>
<td>3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td> -11.3%</td>
<td> -1.6%</td>
<td> -1.1%</td>
<td>2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD. Eur</td>
<td> -9.5%</td>
<td> -2.2%</td>
<td> 0.5%</td>
<td> 2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD. Japan</td>
<td> -9.9%</td>
<td>2.2%</td>
<td> -2.6%</td>
<td> -1.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td> -12.8%</td>
<td> -2.1%</td>
<td> -1.4%</td>
<td>3.8%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">
Slowdowns indicated by
BOLD RED</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305e.jpg" width="353">
Factory inventory levels continued to plummet during January. The 0.8% monthly decline was the fifth in a row and lowered inventories by 4.5% from their August peak. To be sure, these figures have been influenced by the decline in oil prices. However, excluding oil, factory inventories are down 1.2% from their peak, a decline not seen since 2003.
Lower inventories of automobiles have dominated the factory inventory decline. They fell 17.6% in January and by 20.0% over the last three months. Steep production cutbacks pulled furniture inventories down 5.2% over the last six months while inventories of electrical equipment are down 7.2% since September. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305f.jpg" width="353">
Weaker factory shipments have prompted the inventory cutbacks with a 15.6% decline over the last year. Again, lower oil prices account for much of the decline but less oil, factory shipments have fallen 13.9% from their peak last July. Automobile shipments were off by more 36.1% from their summer peak while shipments of electrical equipment fell 19.8% during that period. Shipments of furniture &amp; related products fell 16.2% since the summer.
Total factory orders dropped 1.9% during January. The capital goods sector has been notably hard hit. Machinery orders dropped 3.0% in January and by 29.1% during the last six months. Orders for electrical equipment fell 7.3% during January alone and by 19.6% since July.
The Manufacturers&#39; Shipments, Inventories and Orders (MSIO) data is available in Haver&#39;s USECON database.

<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/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS, %)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-0.8</td>
<td>-1.9</td>
<td>0.0</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.8</td>
<td>-2.8</td>
<td>-2.7</td>
<td>-0.6</td>
<td>2.7</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>-1.9</td>
<td>-4.9</td>
<td>-19.2</td>
<td>0.1</td>
<td>1.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.9</td>
<td>-4.4</td>
<td>-16.6</td>
<td>3.1</td>
<td>1.2</td>
<td>7.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-1.7</td>
<td>-3.3</td>
<td>-15.6</td>
<td>1.7</td>
<td>1.2</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-1.6</td>
<td>-3.9</td>
<td>-14.6</td>
<td>3.7</td>
<td>1.5</td>
<td>6.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>-1.7</td>
<td>-1.5</td>
<td>1.2</td>
<td>3.5</td>
<td>17.1</td>
<td>15.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Transportation</td>
<td>-2.1</td>
<td>-2.5</td>
<td>-3.8</td>
<td>-1.0</td>
<td>8.2</td>
<td>16.0</td>
</tr>
</tbody>
</table>
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Factory inventory levels continued to plummet during January. The 0.8% monthly decline was the fifth in a row and lowered inventories by 4.5% from their August peak. To be sure, these figures have been influenced by the decline in oil [...]

U.S. Factory Inventories Fell A Fifth Month, Shipments Off 15.6% Y/Y

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305c.jpg" width="353">
During last year&#39;s fourth quarter, labor productivity in the nonfarm business sector fell 0.4% (AR), revised down sharply from last month&#39;s indication of a 3.2% increase. The downward revision to 4Q08, however, was offset by upward revisions to prior quarters and for the year, growth was left unchanged at 2.8%, double the gain during all of 2007. The 4Q decline fell short of Consensus expectations for a revision to a 1.5% increase.
Growth in 4Q compensation totaled 5.3% which was upwardly revised from the 5.0% gain indicated last month. That increase bought annual growth in compensation to 3.7% from 4.1% in 2007. Annually, growth in compensation has been quite stable at or slightly below 4% since 2001.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305d.jpg" width="353">
Growth in unit labor costs accelerated sharply last quarter as a result of the productivity revision. It was raised to 5.7% from the 1.8% gain indicated initially. However, though that increase raised growth for the whole year to 0.9% from the 0.5% increase indicated last month, it was still near the weakest in five years.
The downward revision to productivity growth stemmed from a deepened decline in output, now pegged at -8.7%. For the year, however, growth in output was left about unchanged at 0.8% which was the weakest since the recession of 2001. Hours worked fell by an unrevised 8.4% rate last quarter and 1.9% for the full year.
In the factory sector, productivity declined at a little revised 4.0% rate last quarter which was deeper than the rate of decline during the prior two quarters. For the year as a whole, however, manufacturing productivity did rise 1.5%. A decline of 2.5% is in the offing for 2009 due to the recession. Unit labor cost growth in the factory sector surged at a little revised 14.7% rate last quarter as a result of the sharp decline in productivity and it rose at a quickened 2.6% rate for the year. Compensation growth about doubled last quarter to 10.1% and it rose a quickened 4.1% for the whole year.
The productivity &amp; cost figures are available in Haver&#39;s USECON database.
Discussion of &#147;Oil and the Macroeconomy: Lessons for Monetary Policy&quot; by San Francisco Fed President Janet L. Yellen is available <a href="http://www.frbsf.org/news/speeches/2009/0227.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/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a> (SAAR, %)</th>
<th scope="col">4Q &#39;08</th>
<th scope="col">3Q &#39;08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>-0.4</td>
<td>2.2</td>
<td>2.2</td>
<td>2.8</td>
<td>1.4</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>5.3</td>
<td>5.7</td>
<td>4.1</td>
<td>3.7</td>
<td>4.1</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>5.7</td>
<td>3.5</td>
<td>1.8</td>
<td>0.9</td>
<td>2.7</td>
<td>2.8</td>
</tr>
</tbody>
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During last year's fourth quarter, labor productivity in the nonfarm business sector fell 0.4% (AR), revised down sharply from last month's indication of a 3.2% increase. The downward revision to 4Q08, however, was offset by upward [...]

U.S. 4Q Worker Productivity Revised Down Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305a.jpg" width="353">
Weakness in the U.S. labor market eased slightly last week. A 31,000 decline in initial claims for unemployment insurance reversed the gain recorded in the prior week, which had brought claims to a level not seen since 1982. The Labor Department indicated that initial claims for unemployment insurance fell last week to 639,000 from 670,000, a higher figure than initially reported. The latest reading was lower than Consensus expectations for 650,000 initial claims.
The Labor Department will release the February payroll employment figures tomorrow. For last month, claims averaged 642,000 versus the January average of 561,000. During the last ten years there has been an 83% correlation between the level of initial claims and the month-to-month change in nonfarm payrolls.
In the week ending February 21 the largest increases in claims were in Illinois (+3,791), Massachusetts (+3,438), Missouri (+3,027), Ohio (+2,731), and California (+2,677), while the largest decreases were in Florida (-3,586), Virginia (-3,490), New York (-3,420), Michigan (-3,373), and New Jersey (-2,266).
Continuing claims for unemployment insurance eased a slight 14,000 after two weeks of triple digit increase. At 5,106,000, the level of continuing claims remained near the record level. The series dates back to 1966. The four-week average of continuing claims rose 76,800 to 5,011,000. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305b.jpg" width="353">
Though the latest level of continuing claims was a record, the labor force has grown as well, by nearly 30% over the last twenty years. Therefore, the insured rate of unemployment was not at a new record and it remained stable week-to-week at 3.8% which was the highest since 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics. The highest insured rates of unemployment in the week ending February 14 were in Michigan (8.2 percent), Oregon (7.3), Idaho (7.1), Pennsylvania (6.7), Wisconsin (6.5), Rhode Island (6.2), Alaska (6.0), Nevada (6.0), Montana (5.8), and Puerto Rico (5.8).
The unemployment insurance claim data is available in Haver&#39;s WEEKLY database.
The Fed&#39;s latest Beige Book covering regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090304/fullreport20090304.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/28/09</th>
<th scope="col">02/21/09</th>
<th scope="col">02/14/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>639</td>
<td>670</td>
<td>631</td>
<td>85.8%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,106</td>
<td>5,120</td>
<td>81.8%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
</html>

Weakness in the U.S. labor market eased slightly last week. A 31,000 decline in initial claims for unemployment insurance reversed the gain recorded in the prior week, which had brought claims to a level not seen since 1982. The Labor [...]

U.S. Initial Claims For Jobless Insurance Fell Back

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305c.jpg" width="353">
During last year&#39;s fourth quarter, labor productivity in the nonfarm business sector fell 0.4% (AR), revised down sharply from last month&#39;s indication of a 3.2% increase. The downward revision to 4Q08, however, was offset by upward revisions to prior quarters and for the year, growth was left unchanged at 2.8%, double the gain during all of 2007. The 4Q decline fell short of Consensus expectations for a revision to a 1.5% increase.
Growth in 4Q compensation totaled 5.3% which was upwardly revised from the 5.0% gain indicated last month. That increase bought annual growth in compensation to 3.7% from 4.1% in 2007. Annually, growth in compensation has been quite stable at or slightly below 4% since 2001.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305d.jpg" width="353">
Growth in unit labor costs accelerated sharply last quarter as a result of the productivity revision. It was raised to 5.7% from the 1.8% gain indicated initially. However, though that increase raised growth for the whole year to 0.9% from the 0.5% increase indicated last month, it was still near the weakest in five years.
The downward revision to productivity growth stemmed from a deepened decline in output, now pegged at -8.7%. For the year, however, growth in output was left about unchanged at 0.8% which was the weakest since the recession of 2001. Hours worked fell by an unrevised 8.4% rate last quarter and 1.9% for the full year.
In the factory sector, productivity declined at a little revised 4.0% rate last quarter which was deeper than the rate of decline during the prior two quarters. For the year as a whole, however, manufacturing productivity did rise 1.5%. A decline of 2.5% is in the offing for 2009 due to the recession. Unit labor cost growth in the factory sector surged at a little revised 14.7% rate last quarter as a result of the sharp decline in productivity and it rose at a quickened 2.6% rate for the year. Compensation growth about doubled last quarter to 10.1% and it rose a quickened 4.1% for the whole year.
The productivity &amp; cost figures are available in Haver&#39;s USECON database.
Discussion of &#147;Oil and the Macroeconomy: Lessons for Monetary Policy&quot; by San Francisco Fed President Janet L. Yellen is available <a href="http://www.frbsf.org/news/speeches/2009/0227.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/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a> (SAAR, %)</th>
<th scope="col">4Q &#39;08</th>
<th scope="col">3Q &#39;08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>-0.4</td>
<td>2.2</td>
<td>2.2</td>
<td>2.8</td>
<td>1.4</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>5.3</td>
<td>5.7</td>
<td>4.1</td>
<td>3.7</td>
<td>4.1</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>5.7</td>
<td>3.5</td>
<td>1.8</td>
<td>0.9</td>
<td>2.7</td>
<td>2.8</td>
</tr>
</tbody>
</table>
U.S. Initial Claims For Jobless Insurance Fell Back 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 5, 2009


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305a.jpg" width="353">
Weakness in the U.S. labor market eased slightly last week. A 31,000 decline in initial claims for unemployment insurance reversed the gain recorded in the prior week, which had brought claims to a level not seen since 1982. The Labor Department indicated that initial claims for unemployment insurance fell last week to 639,000 from 670,000, a higher figure than initially reported. The latest reading was lower than Consensus expectations for 650,000 initial claims.
The Labor Department will release the February payroll employment figures tomorrow. For last month, claims averaged 642,000 versus the January average of 561,000. During the last ten years there has been an 83% correlation between the level of initial claims and the month-to-month change in nonfarm payrolls.
In the week ending February 21 the largest increases in claims were in Illinois (+3,791), Massachusetts (+3,438), Missouri (+3,027), Ohio (+2,731), and California (+2,677), while the largest decreases were in Florida (-3,586), Virginia (-3,490), New York (-3,420), Michigan (-3,373), and New Jersey (-2,266).
Continuing claims for unemployment insurance eased a slight 14,000 after two weeks of triple digit increase. At 5,106,000, the level of continuing claims remained near the record level. The series dates back to 1966. The four-week average of continuing claims rose 76,800 to 5,011,000. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305b.jpg" width="353">
Though the latest level of continuing claims was a record, the labor force has grown as well, by nearly 30% over the last twenty years. Therefore, the insured rate of unemployment was not at a new record and it remained stable week-to-week at 3.8% which was the highest since 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics. The highest insured rates of unemployment in the week ending February 14 were in Michigan (8.2 percent), Oregon (7.3), Idaho (7.1), Pennsylvania (6.7), Wisconsin (6.5), Rhode Island (6.2), Alaska (6.0), Nevada (6.0), Montana (5.8), and Puerto Rico (5.8).
The unemployment insurance claim data is available in Haver&#39;s WEEKLY database.
The Fed&#39;s latest Beige Book covering regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090304/fullreport20090304.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/28/09</th>
<th scope="col">02/21/09</th>
<th scope="col">02/14/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>639</td>
<td>670</td>
<td>631</td>
<td>85.8%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,106</td>
<td>5,120</td>
<td>81.8%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
U.S. Factory Inventories Fell A Fifth Month, Shipments Off 15.6% Y/Y 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 5, 2009


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305e.jpg" width="353">
Factory inventory levels continued to plummet during January. The 0.8% monthly decline was the fifth in a row and lowered inventories by 4.5% from their August peak. To be sure, these figures have been influenced by the decline in oil prices. However, excluding oil, factory inventories are down 1.2% from their peak, a decline not seen since 2003.
Lower inventories of automobiles have dominated the factory inventory decline. They fell 17.6% in January and by 20.0% over the last three months. Steep production cutbacks pulled furniture inventories down 5.2% over the last six months while inventories of electrical equipment are down 7.2% since September. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090305f.jpg" width="353">
Weaker factory shipments have prompted the inventory cutbacks with a 15.6% decline over the last year. Again, lower oil prices account for much of the decline but less oil, factory shipments have fallen 13.9% from their peak last July. Automobile shipments were off by more 36.1% from their summer peak while shipments of electrical equipment fell 19.8% during that period. Shipments of furniture &amp; related products fell 16.2% since the summer.
Total factory orders dropped 1.9% during January. The capital goods sector has been notably hard hit. Machinery orders dropped 3.0% in January and by 29.1% during the last six months. Orders for electrical equipment fell 7.3% during January alone and by 19.6% since July.
The Manufacturers&#39; Shipments, Inventories and Orders (MSIO) data is available in Haver&#39;s USECON database.

<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/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS, %)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-0.8</td>
<td>-1.9</td>
<td>0.0</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.8</td>
<td>-2.8</td>
<td>-2.7</td>
<td>-0.6</td>
<td>2.7</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>-1.9</td>
<td>-4.9</td>
<td>-19.2</td>
<td>0.1</td>
<td>1.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.9</td>
<td>-4.4</td>
<td>-16.6</td>
<td>3.1</td>
<td>1.2</td>
<td>7.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-1.7</td>
<td>-3.3</td>
<td>-15.6</td>
<td>1.7</td>
<td>1.2</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-1.6</td>
<td>-3.9</td>
<td>-14.6</td>
<td>3.7</td>
<td>1.5</td>
<td>6.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>-1.7</td>
<td>-1.5</td>
<td>1.2</td>
<td>3.5</td>
<td>17.1</td>
<td>15.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Transportation</td>
<td>-2.1</td>
<td>-2.5</td>
<td>-3.8</td>
<td>-1.0</td>
<td>8.2</td>
<td>16.0</td>
</tr>
</tbody>
</table>
</body>
</html>

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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The U.S. trade deficit in goods and services (BOP basis) in March grew to $140.5 billion after narrowing slightly to $123.2 billion in February, revised from $122.7 billion, after widening to $130.7 billion in January according to the U.S. Census Bureau. A $136.7 billion deficit was expected by the Action Economics Forecast Survey. Exports rose 0.2% (6.7% y/y) in March after increasing 2.8% in February. This was accompanied by a 4.4% rise (27.1% y/y) rise in imports which came after m/m stability in February. In Q1’25, the deficit grew to an average $131.4 billion, after rising to an average $83.3 billion in Q4’24.

The trade deficit in goods (BOP basis) widened to a record $163.2 billion in March from $147.9	 billion in February, revised from $147.0 billion. Goods exports (customs value) rose 1.4% (7.0% y/y) in March, after increasing 3.6% in February. The latest increase reflected an 8.2% (8.4% y/y) surge in auto exports which came after a 12.7% strengthening. A 3.5% (4.0% y/y) gain occurred in industrial supplies & materials exports which followed a 5.1% rise. Foods, feeds & beverage exports rose 6.6% (1.4% y/y) after declining in four of the prior five month. Working lower, capital goods exports fell 2.5% (+13.9% y/y) in March after a 4.	8% increase and nonauto consumer goods exports were off 1.1% (+3.4% y/y) in March after a 2.4% gain.

Imports of goods increased 5.5% (31.4% y/y) in March after a 0.2% February easing. Imports of nonauto consumer goods imports surged 27.9% (56.0% y/y) following a 3.1% February gain. Auto imports rose 6.6% (8.7% y/y) after a 1.2% rise. Capital goods imports rose 4.2% (22.5% y/y) following a 1.1% rise. Foods, feeds & beverage imports eased 0.4% (+11.1% y/y) following a 2.0% weakening. Industrial supplies & materials imports declined 12.4% (+39.5% y/y) after weakening 4.6% in February. Petroleum imports by end-use fell 4.1% (-10.2% y/y) after a 2.9% decline. Nonpetroleum imports increased 6.0% (34.8% y/y) after holding steady in February.

The inflation-adjusted goods trade deficit (customs value) deepened to $150.9 billion in March from $136.9 billion in February. Real exports rose 1.6% (5.3% y/y) after a 3.0% February increase, while real imports rose 5.8% (29.8% y/y) in March following a 0.5% February slip.

The services trade surplus narrowed to $23.0 billion in March after decreasing to $23.8 billion in February. It reached a peak of $25.7 billion in November of last year. Service exports fell 0.9% (+5.7% y/y) after a 0.8% decline in February. Construction services exports rose 1.0% (37.7% y/y) after increasing 2.6% in February. Travel services exports fell 7.1% (-3.7% y/y) and financial exports increased 0.9% (7.3% y/y). Transport exports rose 3.1% (2.4% y/y). Service imports eased 0.1% (+10.8% y/y) in March following a 0.8% gain. Maintenance & repair services declined 1.5% (+32.1% y/y) while imported transport services increased 1.2% (1.7% y/y). Imported travel services fell 2.2% (5.3% y/y) while charges for use of intellectual property rose 1.0% (13.6 y/y).

The U.S. goods trade deficit with China narrowed to a seasonally adjusted $24.8 billion in March from $26.6 billion in February. Exports to China declined 8.2% (-10.5% y/y) while imports weakened 7.2% (-2.7% y/y). The deficit with the European Union deepened to a record $48.3 billion in March from $30.9 billion in February. Exports rose 10.9% (14.5% y/y) while imports soared 34.0% (65.4% y/y). The deficit with Japan deepened to $5.8 billion from $5.2 billion in February. Exports rose 1.8% (8.8% y/y) and imports rose 6.4% (9.9% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver’s **USECON** database. Detailed figures on international trade are available in the **USINT** and **USTRADE** databases. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Goods deficit grows as imports surge ahead of tariff imposition.
- Exports edge higher, led by autos.
- Petroleum product imports fall as crude oil prices decline.

U.S. Trade Deficit Deepens to Record in March

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Retail gasoline prices for all grades improved to an average $3.27 per gallon (-13.1% y/y) in the week ended May 5 and reversed the prior week’s easing to $3.26. Prices were $3.37 per gallon to begin the month but remained above their low of $3.13 in the week of December 9. An earlier high was $3.79 in the week ending April 22, 2024. The all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel eaed to $3.50 per gallon (-10.2% y/y) in the week of May 5 from $3.51 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $59.64 per barrel (-26.4% y/y) in the week ended May 2, after rising to $63.09 per barrel in the prior week. Prices remained below a high of $91.45 in the week of September 29, 2023. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $57.13 per barrel. The price of European Brent crude oil declined to $63.50 per barrel (-25.9% y/y) in the week of May 2 from $67.92 in the previous week. Prices remained well below a recent high of $95.61 in the week of September 29, 2023 and compared to a peak of $127.40 in the week of June 10, 2022.

Natural gas prices improved to an average $3.09 per mmbtu (+88.4% y/y) in the week ended May 2, after falling to $3.00/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday’s price was $3.26/mmbtu.

Gasoline demand rose 3.2% y/y in the four weeks ending April 25 following a 0.4% y/y decline in the prior four weeks. Demand for all petroleum products improved 0.3% y/y in the four weeks ending April 25 after a 0.4% y/y rise in the previous four-week period. Crude oil input to refineries eased 0.1% y/y in the four weeks ending April 25 after a 1.3% y/y decline in the prior four weeks.

Gasoline inventories slipped 0.7% y/y in the week ending April 25 after a 1.2% y/y rise in the week ending April 18. Residual fuel oil inventories fell 18.7% y/y in the week of April 25, after a 19.0% y/y fall in the prior week. Crude oil inventories rose 1.4% y/y in the week of April 25 after a 2.6% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories fell w/w to 25.5 days in the week of April 25 from 26.4 days in the prior. The recent low was 22.9 days in the week of November 8. The supply of crude oil eased w/w to 27.9 days in the week of April 25 after three weeks at 28.3 days, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices edge higher.
- Crude oil prices decline.
- Natural gas costs rise.

U.S. Energy Prices Remain Mixed in Latest Week

250506E.jpg

Not many respondents are showing absolute slowing. Only five this month. Only six over the last three months on average. The median total PMI score fell to 49.7 showing contraction in April from 51.1 in March. The average fared slightly better. The 12-months to 6-months to 3-months show a moderate but consistent slowing. The breadth of slowing is wide with 60.9% of survey respondents slowing over three months compared to six months.

The percentile standings show the most strength for the BRIC group with reading above 50% (that marks the median). All other groupings have standings below the 50% mark indicating that they are below their respective medians of the last four-plus years.

Over every horizon from 12-months to 6-months to 3-months, more than 50% of the respondents show a weakening (slowing) in their PMI responses.

Among the largest economies, only Italy has a composite PMI standing above its median (above 50%).

Only 9 of 24 respondents have PMI ranked percentile standings above the 50% mark. That underlines the weakness in composite conditions and the breadth of the weakness.
 
Services sectors no longer are providing the lift to offset ongoing weakness in manufacturing. The differences among countries are narrowing.

Economic conditions across countries may be narrowing for several reasons, one being that the COVID period and then the shock reaction to Russia's invasion from Ukraine put all countries on the same timeline as central banks have been leaning against the shockwaves from those 2 events. As a result of those events, inflation flared but has more recently been falling. Still, inflation continues to be over the top of targets with the European Monetary Union right now making the most progress and Japan facing more late cycle weakness with excessive inflation than other countries in the mix. More recently aggressive tariff policy the United States has put all countries on their back foot and puts everyone on notice that the future has become a lot more uncertain. Central banks that were progressing toward rate cuts now are worried about the possibility of more inflation from tariffs or from the possibility of recession from tariffs - tariffs up the ante on uncertainty as well as on risk. What we see in this month's PMI statistics is a gradual continued erosion as the perceived risk here is that things get steadily but slowly worse as firms, investors, and consumers began to pull in their horns and prepare for something bad to happen not knowing what that might be.

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Global Composite PMIs Erode

Tian Yong Woon

This week, we focus on trade developments between the US and major Asian economies. Early indications coming out of US-India trade talks seem encouraging, with terms such as “forward most-favoured-nation” for the US and “zero-for-zero” tariffs appearing in news reports — terms which, if enacted, would represent a significant win for the US. India stands to benefit greatly as well if key exports to the US, such as pharmaceuticals (chart 1), receive substantial tariff relief. The benefits could be strongly mutual if a deal also grants the US greater access to India’s large auto consumer market, particularly for major US electric vehicle (EV) producers, given that EV adoption in India remains at a very early stage (chart 2).

Turning to South Korea, discussions also appear to be progressing at a healthy pace, although details remain limited and ongoing domestic political challenges continue to hinder substantive breakthroughs. Nonetheless, the South Korean won has shown signs of stabilisation, while local equity markets have remained buoyant (chart 3). Recent trade data for April has also provided some investor relief, as weak exports to the US were more than offset by a strong performance in semiconductor shipments (chart 4).

In Japan, the race to secure a trade deal with the US is well underway, with automotive exports expected to be a key focal point given their significance to Japan’s economy and the US being a major export destination (chart 5). China, however, remains a notable outlier, with formal trade talks with the US not yet underway. Still, the US-China trade relationship continues to be the most closely watched, given its scale and potential impact on global growth and trade dynamics. While markets await China’s official April trade data, early indicators such as port activity already suggest a decline in bilateral trade flows (chart 6).

**US-India trade talks**
US-India trade discussions have reportedly been progressing rapidly, with both sides having already finalized in April the terms of reference for talks, setting the stage for formal negotiations. One early sign of favourable momentum is India’s possible offering of a “forward most-favoured-nation” clause to the US. This would ensure the US always receives the most favourable tariff terms, ahead of any other trade partner. If enacted, this would be a significant win for the US and a major leap forward in the US-India trade relationship. Another reported breakthrough involves India’s reported proposal of “zero-for-zero” tariffs on steel, auto components, and pharmaceuticals—offered on a reciprocal basis up to a certain quantity. If agreed, this would be mutually beneficial, especially as pharmaceuticals remain one of the US economy’s key imports from India, as shown in chart 1. On a separate note, and more recently, India’s phone exports to the US have reportedly gained prominence. With steep US tariffs on China, firms like Apple are increasingly incentivised to accelerate production shifts to India.

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Additionally, India’s proposed “zero-for-zero” tariff plan for auto parts may galvanise US access to India’s large domestic auto market, which has remained comparatively insulated due to high import tariffs. Another area to watch in the trade talks is electric vehicle (EV) imports, especially given US EV giant Tesla’s continued interest in expanding into the Indian market. That said, EV adoption in India remains in its early stages by many measures. While India has an immense middle class with future sales potential, EVs accounted for only about 2% of new cars sold in 2023, as shown in chart 2. This is well below levels seen in other Asian economies like China, or leaders in this space like Norway, where nearly all new cars sold are EVs. Challenges remain in unlocking the domestic Indian market—particularly around affordability and the underdeveloped state of EV infrastructure.

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**US-South Korea trade talks**
Discussions on the US-South Korea trade front also appear to be progressing at a steady pace, with technical talks reportedly having concluded in Washington last week. However, details remain limited, and full-scale negotiations have not yet begun. Complicating matters is South Korea’s domestic political landscape. With the country heading into a snap presidential election on June 3, Vice Industry Minister Park has said there is no chance of a comprehensive deal being reached before then. Still, both sides have committed to working toward an agreement before the expiration of Trump’s 90-day reciprocal tariff pause on July 8. In financial markets, the won continues to swing but remains above its year-to-date lows (chart 3). Meanwhile, South Korean equities have been lifted by a softening in trade rhetoric from both the US and China, as well as optimism around the US-South Korea talks.

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Turning to the hard trade data, South Korea’s more complete April numbers offered some initial relief to investors. The economy still managed to post moderate export growth, surprising many, despite a nearly 7% y/y decline in exports to the US, as shown in chart 4. One of the key drivers was semiconductors, which recorded double-digit y/y growth for the second consecutive month. However, these figures likely do not yet reflect the full initial impact of the steep mutual tariffs between the US and China. Firmer indications may emerge in the coming months. By then, though, attention will likely have shifted toward the outcome of US trade talks with key partners, as the end of its 90-day reciprocal tariff pause draws near.

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**US-Japan trade talks**
Turning to Japan, there is a sense of cautious optimism, with Japan’s chief trade negotiator Akazawa expressing hope for a US-Japan trade deal by June, following the second and most recent round of talks held in Washington last week. A key point of interest is whether Japan can negotiate an exemption from the current 25% automotive tariffs imposed by the US. This is especially significant given the importance of the US as a destination for Japanese auto exports, as shown in chart 5, and the central role the sector plays in Japan’s broader manufacturing economy. Also worth noting is a recent clarification by Japan’s Finance Minister Kato, who walked back earlier remarks and stated that Japan will not use the sale of US Treasuries as a bargaining tool. The clarification may help defuse a potential point of friction between the two sides as trade discussions continue.

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**US-China trade developments**
Turning to US-China trade developments — while progress here has lagged, this relationship remains the most closely watched, given its potentially large impact if meaningful movement occurs. Recent messaging from both sides has softened, stepping back from the fiery exchanges and tariff escalations seen earlier in April, offering some interim relief for investors. China has reportedly exempted certain US imports from tariffs, including specific pharmaceutical and industrial chemical products. However, on US-China trade talks, they remain at a very early stage, with China merely “evaluating” the prospect of negotiations with the US. This suggests we are still far from anything resembling a formal deal. Investors are now closely watching for first-round effects of US tariffs, which are expected to appear in China’s April trade numbers due later this week. Early signs point to a slowdown. For example, vessel traffic at the Los Angeles–Long Beach port remains at range lows, hinting at reduced shipments from China.

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Asia

Economic Letter from Asia: Art of the Deal

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The U.S. ISM Services PMI rose to 51.6 during April, after falling sharply to 50.8 in March from 53.5 in February, according to today’s report by the Institute for Supply Management. The reading indicated service sector expansion for the tenth consecutive month, although the rate of expansion has slowed significantly. The index hit a recent high of 55.8 in October of last year and remains below the all-time high of 67.5 in November 2021. The Action Economics Forecast Survey expected 50.2 for April.

Haver Analytics constructs a composite index combining the services index and the manufacturing index released on Thursday. This index rose to 51.2 in Apri from 50.6 in March. The latest figure remains above its June low of 49.1.

Amongst the services component series, the employment index led last month’s improvement in the overall index. It rose to 49.0 after falling sharply to 46.2 in March. Higher employment was reported by a slightly improved 14.6% (NSA) of respondents while a lessened 16.4% reported a decline. The new orders index rose to 52.3 after falling to 50.4 in March. A higher 22.4% (NSA) of respondents reported a rise in orders while a lessened 15.3% reported a decline. Reporting slower delivery speeds, the supplier delivery series edged up to 51.3 in April after falling to 50.6 in March. Working lower, the business activity series declined to 53.7 after rising to 55.9 in March. A higher 26.2% (NSA) of respondents reported improved activity while a lessened 14.0% reported deterioration.

On the inflation front, the prices index surged to 68.9 in April after easing to 62.8 in March. A greatly increased 39.6% (NSA) of respondents reported higher prices while a lessened 1.9% reported lower prices. The index was increased from its December 2022 low 53.1 and stood at its highest level since October 2022.

Additionally, the new export orders index increased to 48.6 (NSA) in April following a decline to 45.8 in March from 52.1 in February. Just 14.8% of survey respondents reported higher exports while an increased 17.7% reported a decline. The imports index plummeted to 44.3 last month from 52.6 in March. A greatly lessened 4.7% of respondents reported higher imports while a doubled 16.2% reported a decline. The inventory change index jumped to 53.4, a six-month high. The order backlog index edged up to 48.0 in April after falling sharply to 47.4 in March. A lessened 12.2% of respondents reported higher backlogs while a fewer 16.2% reported a decline. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector, while below 50 suggests	 contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries. The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

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- Total index remains near nine-month low.
- Employment, new orders & supplier deliveries edge up. Business activity weakens. 
- Prices Index strengthens to roughly two-year high.

Economy in Brief: March 2009

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U.S. Unemployment Rate of 8.1% Highest Since 1983. Payroll Loss Near the Biggest Since 1949

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