Tom Moeller

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

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

U.S. Payrolls: Areas of Strength & Weakness

Louise Curley

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

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

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

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407b.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407c.jpg" border="0" height="265" width="312">

The latest three month's employment data show that hiring
momentum has turned negative. The 0.7% annual rate of decline in
nonfarm payrolls through March is down from positive growth of 1.1%
last year and of 1.8% during 2006. Is a recession indicated? The latest
numbers hardly measure up to those at the depths of the last two
recessions. But they are indicative of the downward momentum at the
start of the 2001 and the 1990 downturns.
With the measure showing that total hiring momentum down the
Labor Department also provides a figure on just how far across
industries the weakness spreads. Diffusion indexes measure that breadth
of change amongst industry categories and on a three month basis, only
42.9% of payrolls were rising in March. In recession that figure falls
into the 30-40% range, so it's close to giving a downturn signal.
Of the 42.9%, virtually all of the employment gains have
occurred in three of the categories listed in each month's data
release: education &amp; health, leisure &amp; hospitality, and
government. Within the first category, education payrolls have grown at
a 4.0% rate during the last three months which is nearly double the
growth from 2003 to 2007. Health care &amp; social services
payrolls also have grown at a roughly steady, firm 2.6% rate. In the
second category, jobs in the leisure &amp; hospitality sector also
have grown recently but at a lesser 1.4% rate which is down from the
2.5% average growth during the last four years. Finally, in the
government sector growth in payrolls has been limited to the state and
local sectors. Federal government payrolls have been trending lower
since 2003.
Construction sector jobs have suffered due to the fallout from
the housing sector's decline. Within the total, residential sector jobs
have lately been falling at an 11.3% rate. The depth of that rate of
decline has been mitigated somewhat by just a 3.0% shortfall in
commercial sector employment. Jobs amongst specialty trade contractors,
by far the largest grouping in the construction total, have been
falling at a 6.0% rate and by nearly double that rate in the
residential subgroup.
In nearly all of the goods producing categories there has been
job loss. The few exceptions are computers &amp; peripherals,
communications equipment and machinery. To the downside, job losses
have been logged in the semiconductor, metals, electrical equipment,
plastics and the paper industries. Most notable are the job losses in
the motor vehicle, furniture, textile and the apparel industries where
loss rates have been near or above double digit.
In the private service sector industries the rate of job
creation also has been hit severely. Jobs have fallen hard in the
retail trade sector, the information and in the financial service
businesses. Additionally, cutbacks in real estate sector jobs aside
from rental &amp; leasing have been running at a 3.6% annual rate;
a record rate of decline for this series which dates back only to 1990.
Employment in the finance &amp; insurance businesses has been
ticking down at a 0.6% rate led by a 5.8% rate of decline in investment
funds &amp; trusts. That has been offset by payroll growth at
commercial banks and securities &amp; investment houses.
Professional &amp; business service service jobs have been falling
at a 2.1% rate, the quickest since 2003. Jobs in temporary help
agencies have plummeted at an 8.9% rate. The information sector also
has lost jobs at a 1.1% rate over the last three months but jobs in
motion pictures &amp; sound recording have posted gains at a 5.5%
rate.
The data behind the series in this report all can be found in
Haver's USECON data base.
Population Aging, Labor Demand, and the
Structure of Wages is a working paper from the Federal
Reserve Bank of Boston and it can be found <a href="http://www.bos.frb.org/economic/wp/wp2007/wp0708.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407e.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407d.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment:
000s</a></th>
<th scope="col">% of Total Payrolls</th>
<th scope="col">March (000)</th>
<th scope="col">3-Month % (AR)</th>
<th scope="col">Y/Y %</th>
<th scope="col">2007 (%)</th>
<th scope="col">2006 (%)</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td></td>
<td>-80</td>
<td>-0.7</td>
<td>0.4</td>
<td>1.1</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">Private&nbsp;</td>
<td>84</td>
<td>-98</td>
<td>-1.0</td>
<td>0.3</td>
<td>1.3</td>
<td>1.9</td>
</tr>
<tr class="odd">
<td class="firstcol">
Goods Producing Industries</td>
<td>16</td>
<td>-93</td>
<td>-4.4</td>
<td>-2.8</td>
<td>-1.4</td>
<td>1.6</td>
</tr>
<tr>
<td class="firstcol">
Manufacturing</td>
<td>10</td>
<td>-48</td>
<td>-3.7</td>
<td>-2.2</td>
<td>-1.9</td>
<td>-0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">
Construction</td>
<td>5</td>
<td>-51</td>
<td>-6.6</td>
<td>-4.6</td>
<td>-1.0</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">
Service Producing Industries</td>
<td>68</td>
<td>-5</td>
<td>-0.2</td>
<td>1.0</td>
<td>1.8</td>
<td>2.1</td>
</tr>
<tr class="odd">
<td class="firstcol">
Retail Trade</td>
<td>12</td>
<td>-12</td>
<td>-1.9</td>
<td>-0.7</td>
<td>0.9</td>
<td>0.5</td>
</tr>
<tr>
<td class="firstcol">
Information</td>
<td>2</td>
<td>-6</td>
<td>-1.1</td>
<td>-0.7</td>
<td>-0.3</td>
<td>-0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
Financial Activities</td>
<td>6</td>
<td>-5</td>
<td>-1.2</td>
<td>-1.3</td>
<td>-0.2</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">
Real Estate, Rental &amp; Leasing</td>
<td>2</td>
<td>-5</td>
<td>-2.8</td>
<td>-2.0</td>
<td>-0.5</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
Professional &amp; Business</td>
<td>13</td>
<td>-35</td>
<td>-2.1</td>
<td>0.9</td>
<td>2.2</td>
<td>3.7</td>
</tr>
<tr>
<td class="firstcol">
Education, Health &amp; social services</td>
<td>14</td>
<td>42</td>
<td>2.9</td>
<td>3.0</td>
<td>2.8</td>
<td>2.6</td>
</tr>
<tr class="odd">
<td class="firstcol">
Leisure &amp; Hospitality</td>
<td>10</td>
<td>18</td>
<td>1.4</td>
<td>2.5</td>
<td>2.8</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol"> Government</td>
<td>16</td>
<td>18</td>
<td>1.0</td>
<td>1.1</td>
<td>1.0</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
Federal</td>
<td>2</td>
<td>2</td>
<td>-1.3</td>
<td>-0.1</td>
<td>-0.2</td>
<td>-0.0</td>
</tr>
<tr>
<td class="firstcol">
State</td>
<td>4</td>
<td>3</td>
<td>1.2</td>
<td>1.1</td>
<td>1.0</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
Local</td>
<td>10</td>
<td>13</td>
<td>1.3</td>
<td>1.3</td>
<td>1.3</td>
<td>0.9</td>
</tr>
</tbody>
</table>
German Industrial Production
Surprises on the Upside: Warm Weather Boosts Construction Activity 
by <a href="/comment/Curley.html">Louise
Curley</a> April 7, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080407a.jpg" align="left" border="0" height="265" width="353">
German industrial production rose in February in spite of the
disappointing trends in orders and sales noted by Robert Brusca last
week. The result, however, is less surprising when one looks at the
composition of production. It is primarily the manufacturing sector
which is affected by orders and sales and the increase from January to
February in manufacturing production was only 0.08%. Production in
electricity, gas and water increased 1.3%. The big increases were in
the small mining and quarrying sector--4.2% and in the more important
sector, construction--3.7%. The attached chart shows the month-to-month
percent changes in the manufacturing and construction components of
Industrial Production.
Construction activity which started up last year after almost
a decade of decline benefited from the unseasonally warm weather.
According to the German weather bureau the average temperature in
Germany in February was 3.70 Celsius (38.70
Fahrenheit) compared with the 1961-1990 average of 0.40
Celsius (32.70 Fahrenheit). 
 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMAN
INDUSTRIAL PRODUCTION&nbsp;&nbsp; (2000=100)</th>
<th scope="col">Feb 08</th>
<th scope="col">Jan&nbsp; 08&nbsp;</th>
<th scope="col">Dec&nbsp; 07&nbsp;</th>
<th scope="col">Nov&nbsp;&nbsp;&nbsp;
07&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>121.5</td>
<td>121.0</td>
<td>119.3</td>
<td>117.6</td>
<td>116.0</td>
<td>109.8</td>
<td>103.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Manufacturing&nbsp;</td>
<td>126.5</td>
<td>136.4</td>
<td>124.7</td>
<td>122.6</td>
<td>121.0</td>
<td>113.2</td>
<td>106.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Mining and Quarrying</td>
<td>80.7</td>
<td>77.5</td>
<td>81.0</td>
<td>81.7</td>
<td>84.5</td>
<td>84.2</td>
<td>86.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Electricity, gas and
water</td>
<td>98.4</td>
<td>97.1</td>
<td>103.2</td>
<td>106.4</td>
<td>102.5</td>
<td>105.9</td>
<td>104.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Construction</td>
<td>95.5</td>
<td>95.6</td>
<td>82.7</td>
<td>80.9</td>
<td>83.2</td>
<td>81.0</td>
<td>76.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;MONTH TO
MONTH % CHANGE</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.41</td>
<td>1.42</td>
<td>1.45</td>
<td>-0.25</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Manufacturing&nbsp;</td>
<td>0.08</td>
<td>1.36</td>
<td>1.71</td>
<td>-0.16</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Mining and Quarrying</td>
<td>4.13</td>
<td>-4.32</td>
<td>-0.86</td>
<td>-2.74</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Electricity, gas and
water</td>
<td>1.34</td>
<td>-5.91</td>
<td>-3.01</td>
<td>-0.75</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Construction</td>
<td>3.69</td>
<td>11.77</td>
<td>2.22</td>
<td>-0.25</td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
<td style="background-color: rgb(204, 204, 204);"></td>
</tr>
</tbody>
</table>
</body></html>

U.S. Payrolls: Areas of Strength& Weakness

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<a href="http://"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080404b.jpg" align="left" border="0" height="265" width="353"></a>
For the third consecutive month the Bureau of Labor Statistic
reported that nonfarm payrolls fell. The 80,000 worker decline in March
was the largest of the three and the two prior months' declines were
revised deeper from the initial reports. Expectations had been for a
53,000 worker decline in March payrolls.
Has economic recession begun? When the job
figures are combined with a roughly stable level of hours worked, the
level of aggregate hours (employment times hours) fell in two of the
last three months and fell at an annual rate of 1.2% during 1Q. Over
the last thirty years there has been a 76% correlation between the q/q
change in aggregate hours worked and the change in real GDP. The 25%
that is left out of that correlation reflects productivity growth and
during the last three years it rose between 1.0% and 2.0%. When
aggregate hours and productivity are added they suggest no growth or
even a slight decline in 1Q real GDP.
From the household sector survey the unemployment
rate rose to 5.1%, its highest level since May of 2005. Job
creation did not keep up with growth in the labor force. Household
employment declined by 24,000 (-0.1% y/y) and jobs declined irregularly
in each month since early last year. The labor force, conversely, rose
410,000 last month. The annual rate of gain fell to 0.6% from 1.9%
early last year. Individuals who stopped looking for work did so at a
1.4% y/y rate in March, up from a zero rate of change at the end of
2006.<a href="http://"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080404d.jpg" align="right" border="0" height="265" width="353"></a>
From the establishment survey, aside from continued growth in
government sector jobs (+1.1% y/y), the figures for private nonfarm
payrolls painted a distressing picture of the job market. Private
sector payrolls fell 98,000 in March. It was the fourth consecutive
monthly decline and it followed a 109,000 drop in February. While the
y/y change in private payrolls still was a positive 0.3%, recent
momentum as indicated by the three month change, fell to a negative
1.0% (AR).
Factory sector job loss intensified last month to a 48,000
decline, nearly the largest monthly drop since 2003. The three month
rate of job loss deepened to -3.7%, also its fastest since 2003.
Construction sector employment declines continued to
accelerate. The m/m decline of 51,000 was the largest in nearly a year
and the three month growth rate stood at -6.6%, near its lowest since
late 1991.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080404c.jpg" align="left" border="0" height="265" width="353">
Hiring in the private service sector was more distressing
given its norm of positive job growth. Jobs in retail trade fell for
the sixth month in the last seven and the three month rate of change
deepened to -1.9%. Professional &amp; business services jobs fell
for the third straight month and the three month rate of change was
-2.1%. Temporary help services jobs again was quite weak and fell
21,600 pulling three month growth to -8.9% (AR). Jobs here have been
declining for more than a year. Employment in finance dropped by 5,000
and they're down 1.5% from the late 2006 peak. Weakness in the real
estate sector jobs fell 4,200 job last month and at a 3.6% rate over
the last three months.
Just as during February, the March employment figures
contained an indicator which portended even further weakness in overall
job creation. The one month diffusion index, which measures the breadth
of job gain or loss (50 is the break even level), indicated loss at
47.7%. The three month index was an even weaker 42.9% which was its
lowest since 2003.
Average hourly earnings rose a very steady
0.3%. Factory sector earnings rose 0.2% (2.9% y/y) and private
service-providing earnings rose 0.3% (4.1% y/y) for the second month.
The average duration of unemployment fell slightly to 16.2
weeks from 16.8 in February. Those figures are down from the averages
of the prior several years. 
 

Central Bank Commitment and Communication
is yesterday's speech by Fed GovernorFrederic S. Mishkin and it can be
found <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20080403a.htm">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">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-80</td>
<td>-76</td>
<td>-76</td>
<td>0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">
Previous</td>
<td>--</td>
<td>-63</td>
<td>-22</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>-48</td>
<td>-46</td>
<td>-35</td>
<td>-2.2%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-51</td>
<td>-37</td>
<td>-39</td>
<td>-4.6%</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>33.8</td>
<td>33.7</td>
<td>33.7</td>
<td>33.9&nbsp; (Mar'07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.6%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.1%</td>
<td>4.8%</td>
<td>4.9%</td>
<td>4.4% (Mar'07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
</body></html>

For the third consecutive month the Bureau of Labor Statistic reported that nonfarm payrolls fell. The 80,000 worker decline in March was the largest of the three and the two prior months' declines were revised deeper from the initial [...]

U.S. Payrolls Down For Third Month, Unemployment Up

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080404a.jpg" align="left" border="0" height="265" width="353">
German foreign orders is a very volatile series &#8211; even when
expressed as Yr/Yr gains. While both the domestic and foreign orders
series are ragged, each shows a tendency for orders growth to
decelerate (see graph). Foreign orders are off especially sharply but
the series is so volatile it is difficult to know what to make of the
drop off.

The drop off in the quarter to date (two months out of three)
shows total orders off at a 4.8% pace, foreign orders off at a 9.9%
pace and domestic orders UP at a 1.1% pace.

The message in the foreign/domestic split is that the weakness
is being imported. Further, the foreign orders from outside the Euro
Area are the weakest portion of foreign orders. That places the blame
for weakness back on the strong euro.

Still, the trends for both domestic and foreign orders are
clearly lower and become weaker as the sequential data in the table
tells us. And Germany has been one of the strongest economies in the
Euro Area and it is the largest Euro Area member economy. The weakening
in this key economy&#8217;s orders is something to be wary of since so far
the service sector data have been weaker than the Manufacturing sector
which now seems to be emitting new weakening signs of its own.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> German Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>YrAgo</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-0.5%</td>
<td>-0.7%</td>
<td>-1.2%</td>
<td>-9.3%</td>
<td>-4.7%</td>
<td>5.4%</td>
<td>10.4%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>-1.1%</td>
<td>-0.4%</td>
<td>-2.3%</td>
<td>-14.2%</td>
<td>-7.4%</td>
<td>5.7%</td>
<td>11.7%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>0.0%</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>-3.7%</td>
<td>-1.9%</td>
<td>5.1%</td>
<td>8.9%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Sector Sales</td>
</tr>
<tr>
<td class="firstcol">MFG/Mining</td>
<td>0.1%</td>
<td>2.1%</td>
<td>1.0%</td>
<td>13.3%</td>
<td>6.4%</td>
<td>6.4%</td>
<td>7.7%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-1.2%</td>
<td>1.0%</td>
<td>-0.1%</td>
<td>-1.1%</td>
<td>-0.6%</td>
<td>0.6%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>-0.9%</td>
<td>0.8%</td>
<td>1.0%</td>
<td>3.8%</td>
<td>1.9%</td>
<td>-0.2%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondurables</td>
<td>-1.4%</td>
<td>1.1%</td>
<td>-0.4%</td>
<td>-2.6%</td>
<td>-1.3%</td>
<td>0.7%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>-0.6%</td>
<td>4.2%</td>
<td>0.8%</td>
<td>19.1%</td>
<td>9.2%</td>
<td>9.8%</td>
<td>7.8%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>1.5%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>14.0%</td>
<td>6.7%</td>
<td>5.6%</td>
<td>10.2%</td>
</tr>
<tr>
<td class="firstcol">All Manufacturing Sales</td>
<td>-0.1%</td>
<td>2.1%</td>
<td>1.1%</td>
<td>13.1%</td>
<td>6.3%</td>
<td>6.1%</td>
<td>7.2%</td>
</tr>
</tbody>
</table>
</body></html>

German foreign orders is a very volatile series – even when expressed as Yr/Yr gains. While both the domestic and foreign orders series are ragged, each shows a tendency for orders growth to decelerate (see graph). Foreign orders are [...]

German Orders Fall in January and February - Is Euro to Blame?

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080404a.jpg" align="left" border="0" height="265" width="353">
German foreign orders is a very volatile series &#8211; even when
expressed as Yr/Yr gains. While both the domestic and foreign orders
series are ragged, each shows a tendency for orders growth to
decelerate (see graph). Foreign orders are off especially sharply but
the series is so volatile it is difficult to know what to make of the
drop off.

The drop off in the quarter to date (two months out of three)
shows total orders off at a 4.8% pace, foreign orders off at a 9.9%
pace and domestic orders UP at a 1.1% pace.

The message in the foreign/domestic split is that the weakness
is being imported. Further, the foreign orders from outside the Euro
Area are the weakest portion of foreign orders. That places the blame
for weakness back on the strong euro.

Still, the trends for both domestic and foreign orders are
clearly lower and become weaker as the sequential data in the table
tells us. And Germany has been one of the strongest economies in the
Euro Area and it is the largest Euro Area member economy. The weakening
in this key economy&#8217;s orders is something to be wary of since so far
the service sector data have been weaker than the Manufacturing sector
which now seems to be emitting new weakening signs of its own.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> German
Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>YrAgo</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-0.5%</td>
<td>-0.7%</td>
<td>-1.2%</td>
<td>-9.3%</td>
<td>-4.7%</td>
<td>5.4%</td>
<td>10.4%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>-1.1%</td>
<td>-0.4%</td>
<td>-2.3%</td>
<td>-14.2%</td>
<td>-7.4%</td>
<td>5.7%</td>
<td>11.7%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>0.0%</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>-3.7%</td>
<td>-1.9%</td>
<td>5.1%</td>
<td>8.9%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Sector
Sales</td>
</tr>
<tr>
<td class="firstcol">MFG/Mining</td>
<td>0.1%</td>
<td>2.1%</td>
<td>1.0%</td>
<td>13.3%</td>
<td>6.4%</td>
<td>6.4%</td>
<td>7.7%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-1.2%</td>
<td>1.0%</td>
<td>-0.1%</td>
<td>-1.1%</td>
<td>-0.6%</td>
<td>0.6%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>-0.9%</td>
<td>0.8%</td>
<td>1.0%</td>
<td>3.8%</td>
<td>1.9%</td>
<td>-0.2%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondurables</td>
<td>-1.4%</td>
<td>1.1%</td>
<td>-0.4%</td>
<td>-2.6%</td>
<td>-1.3%</td>
<td>0.7%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>-0.6%</td>
<td>4.2%</td>
<td>0.8%</td>
<td>19.1%</td>
<td>9.2%</td>
<td>9.8%</td>
<td>7.8%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>1.5%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>14.0%</td>
<td>6.7%</td>
<td>5.6%</td>
<td>10.2%</td>
</tr>
<tr>
<td class="firstcol">All Manufacturing Sales</td>
<td>-0.1%</td>
<td>2.1%</td>
<td>1.1%</td>
<td>13.1%</td>
<td>6.3%</td>
<td>6.1%</td>
<td>7.2%</td>
</tr>
</tbody>
</table>
U.S. Payrolls Down For Third
Month, Unemployment Up 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 4, 2008


<a href="http://"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080404b.jpg" align="left" border="0" height="265" width="353"></a>
For the third consecutive month the Bureau of Labor Statistic
reported that nonfarm payrolls fell. The 80,000 worker decline in March
was the largest of the three and the two prior months' declines were
revised deeper from the initial reports. Expectations had been for a
53,000 worker decline in March payrolls.
Has economic recession begun? When the job
figures are combined with a roughly stable level of hours worked, the
level of aggregate hours (employment times hours) fell in two of the
last three months and fell at an annual rate of 1.2% during 1Q. Over
the last thirty years there has been a 76% correlation between the q/q
change in aggregate hours worked and the change in real GDP. The 25%
that is left out of that correlation reflects productivity growth and
during the last three years it rose between 1.0% and 2.0%. When
aggregate hours and productivity are added they suggest no growth or
even a slight decline in 1Q real GDP.
From the household sector survey the unemployment
rate rose to 5.1%, its highest level since May of 2005. Job
creation did not keep up with growth in the labor force. Household
employment declined by 24,000 (-0.1% y/y) and jobs declined irregularly
in each month since early last year. The labor force, conversely, rose
410,000 last month. The annual rate of gain fell to 0.6% from 1.9%
early last year. Individuals who stopped looking for work did so at a
1.4% y/y rate in March, up from a zero rate of change at the end of
2006.<a href="http://"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080404d.jpg" align="right" border="0" height="265" width="353"></a>
From the establishment survey, aside from continued growth in
government sector jobs (+1.1% y/y), the figures for private nonfarm
payrolls painted a distressing picture of the job market. Private
sector payrolls fell 98,000 in March. It was the fourth consecutive
monthly decline and it followed a 109,000 drop in February. While the
y/y change in private payrolls still was a positive 0.3%, recent
momentum as indicated by the three month change, fell to a negative
1.0% (AR).
Factory sector job loss intensified last month to a 48,000
decline, nearly the largest monthly drop since 2003. The three month
rate of job loss deepened to -3.7%, also its fastest since 2003.
Construction sector employment declines continued to
accelerate. The m/m decline of 51,000 was the largest in nearly a year
and the three month growth rate stood at -6.6%, near its lowest since
late 1991.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080404c.jpg" align="left" border="0" height="265" width="353">
Hiring in the private service sector was more distressing
given its norm of positive job growth. Jobs in retail trade fell for
the sixth month in the last seven and the three month rate of change
deepened to -1.9%. Professional &amp; business services jobs fell
for the third straight month and the three month rate of change was
-2.1%. Temporary help services jobs again was quite weak and fell
21,600 pulling three month growth to -8.9% (AR). Jobs here have been
declining for more than a year. Employment in finance dropped by 5,000
and they're down 1.5% from the late 2006 peak. Weakness in the real
estate sector jobs fell 4,200 job last month and at a 3.6% rate over
the last three months.
Just as during February, the March employment figures
contained an indicator which portended even further weakness in overall
job creation. The one month diffusion index, which measures the breadth
of job gain or loss (50 is the break even level), indicated loss at
47.7%. The three month index was an even weaker 42.9% which was its
lowest since 2003.
Average hourly earnings rose a very steady
0.3%. Factory sector earnings rose 0.2% (2.9% y/y) and private
service-providing earnings rose 0.3% (4.1% y/y) for the second month.
The average duration of unemployment fell slightly to 16.2
weeks from 16.8 in February. Those figures are down from the averages
of the prior several years. 
 

Central Bank Commitment and Communication
is yesterday's speech by Fed GovernorFrederic S. Mishkin and it can be
found <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20080403a.htm">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">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-80</td>
<td>-76</td>
<td>-76</td>
<td>0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">
Previous</td>
<td>--</td>
<td>-63</td>
<td>-22</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>-48</td>
<td>-46</td>
<td>-35</td>
<td>-2.2%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-51</td>
<td>-37</td>
<td>-39</td>
<td>-4.6%</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>33.8</td>
<td>33.7</td>
<td>33.7</td>
<td>33.9&nbsp; (Mar'07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.6%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.1%</td>
<td>4.8%</td>
<td>4.9%</td>
<td>4.4% (Mar'07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
</body></html>

German Orders Fall in January andFebruary - Is Euro to Blame?

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<html><head>
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080403f.jpg" align="left" border="0" height="265" width="353">
The UK service sector index for March is a fresh release and
it shows a drop in the index to 52.11 from 54.05 in February. At that
level the service sector index lies in the 33rd
percentile of its range of values since 1995. The MFG sector lies at
the 50th percentile, its range midpoint over a
longer period going back to 1992. Construction, with an index available
over the same period as for services ,is in the lower ten percentile of
its range.
For business services the prices-charged index fell to 56.2
from 56.8 and shows less pressure than the MFG price indexes released
earlier.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> MFG,
Construction and Services PMI CIPS/NTC</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Monthly Readings</td>
<td colspan="3">Change Over:</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Mar-08</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>3MO</td>
<td>6MO</td>
<td>12MO</td>
<td>of range</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>51.35</td>
<td>51.32</td>
<td>50.63</td>
<td>-1.04</td>
<td>-3.15</td>
<td>-3.34</td>
<td>50.3</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>47.19</td>
<td>52.44</td>
<td>53.87</td>
<td>-8.80</td>
<td>-13.06</td>
<td>-11.70</td>
<td>10.2</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>52.11</td>
<td>54.05</td>
<td>52.46</td>
<td>-0.25</td>
<td>-4.58</td>
<td>-5.47</td>
<td>33.8</td>
</tr>
<tr class="grey2">
<td colspan="8" class="firstcol">MFG range
since January 1992;
Construction Since April 1997 Services Since July 1995.</td>
</tr>
</tbody>
</table>
</body></html>

The UK service sector index for March is a fresh release and it shows a drop in the index to 52.11 from 54.05 in February. At that level the service sector index lies in the 33rd percentile of its range of values since 1995. The MFG [...]

UK Service Sector Takes a Hit in March

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080403e.jpg" align="left" border="0" height="265" width="353">
Retail sales are clearly damaged goods in the Euro Area. The
drop in February sales was not expected. Two months into the new
quarter retail sales volume growth is dead flat. Trend spending growth
shows all negative numbers but the degree of decline is steadily
diminishing. High and rising food prices are affecting the volume of
sales for food. Outside of food, purchases are weak but are showing
some resilience with an increase over the recent three months. Nonfood
purchases are rising at a 1.8% annual rate in the current quarter. Both Germany and the UK are
demonstrating some resilience in the recent three months. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> Euro
Area 15 Retail Sales Volume</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area 15 Total</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-2.1%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-1.7%</td>
<td>-2.5%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nonfood</td>
<td>-0.8%</td>
<td>0.9%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>-1.8%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Textiles</td>
<td>#N/A</td>
<td>1.7%</td>
<td>0.2%</td>
<td>5.6%</td>
<td>-0.2%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">HH Goods</td>
<td>#N/A</td>
<td>0.7%</td>
<td>0.6%</td>
<td>1.9%</td>
<td>-2.0%</td>
<td>0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Books newspapers</td>
<td>#N/A</td>
<td>1.2%</td>
<td>-0.4%</td>
<td>3.8%</td>
<td>0.5%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Pharmaceutical</td>
<td>#N/A</td>
<td>0.3%</td>
<td>0.1%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other nonspecialized stores</td>
<td>#N/A</td>
<td>0.8%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Mail order</td>
<td>#N/A</td>
<td>0.2%</td>
<td>3.0%</td>
<td>7.6%</td>
<td>2.1%</td>
<td>4.4%</td>
</tr>
<tr class="even">
<td colspan="7" class="firstcol">Nonfood
Country Detail;
Volume</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>-0.6%</td>
<td>1.6%</td>
<td>-0.5%</td>
<td>1.7%</td>
<td>-2.0%</td>
<td>-1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>0.6%</td>
<td>1.0%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy (Total: Value)</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.0%</td>
<td>-0.4%</td>
<td>0.9%</td>
<td>0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU)</td>
<td>1.8%</td>
<td>1.0%</td>
<td>0.2%</td>
<td>12.8%</td>
<td>8.8%</td>
<td>8.3%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Shaded areas
calculated on a
one-month lag due to lagging data.</td>
</tr>
<tr class="grey2">
<td colspan="7" class="firstcol">The EA 15
countries are Austria,
Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain.</td>
</tr>
</tbody>
</table>
</body></html>

Retail sales are clearly damaged goods in the Euro Area. The drop in February sales was not expected. Two months into the new quarter retail sales volume growth is dead flat. Trend spending growth shows all negative numbers but the [...]

European Consumer Spending Weakens in February

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

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

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Andrew Cates

**The global business cycle** 
The recent sharp decline in the Future Output Balance in the global composite PMI survey reflects a sudden deterioration in global business expectations. The sweeping tariffs, introduced in April 2025, have generated heightened uncertainty around trade policy and sparked fears of retaliatory actions from key trading partners. As a result, businesses worldwide are scaling back their expectations for future output, wary of rising costs, disrupted demand flows, and a broader shift toward protectionism that could undermine global economic momentum.

250507Z1.jpg

Note: The extreme declines in the Future Output Balance that were recorded in the early months of 2020 (at the height of the COVID pandemic) have been removed from this chart.

**Global supply chain pressures**
Still, despite the marked deterioration in global business expectations, this second chart below provides a reassuring counterpoint: as of now, there is little evidence that global supply chain pressures have materially intensified. Both the New York Fed’s Global Supply Chain Pressure Index and the Baltic Exchange Dry Index remain relatively subdued, especially compared to the pandemic-era spikes of 2020–2022. While there has been heightened concern following the April 2025 US tariff announcements, these trade policy shifts have yet to translate into measurable physical disruption in logistics or freight rates. The stability of these indices suggests that although sentiment has taken a hit, global shipping networks and supply flows are, for now, absorbing the shock. However, this calm may prove fragile if the policy environment hardens further or retaliatory trade actions begin to compound the strain.

250507Z2.jpg

**Expectations for central banks’ policy rates** 
Adding to the picture of mounting economic caution, the latest Blue Chip Financial Forecasts survey reveals that expectations for policy easing over the next 12 months have become even more pronounced than in previous months. While earlier surveys had already pointed to a further extension of the global rate-cutting cycle, the latest results suggest forecasters now anticipate a deeper and more aggressive round of monetary easing—most notably from the US Federal Reserve, which is now expected to deliver nearly a full percentage point in rate cuts over the next 12 months. The sharp deterioration in business sentiment is reshaping the macro narrative: central banks are no longer simply guiding inflation lower, but are instead preparing to confront the risk of a deeper, demand-driven slowdown.

250507Z3.jpg

**Energy prices and inflation** 
Adding further context to the growing expectations for policy easing, oil prices have dropped sharply in recent weeks—driven by mounting concerns over global growth, as reflected in weakening business sentiment and softer demand indicators. The chart below provides a longer-run perspective on why this matters: energy prices have historically played a central role in shaping the global inflation trajectory. The strong positive correlation (r = 0.83) between median world energy price inflation and median core consumer price inflation underscores the powerful pass-through effects energy costs can have on broader price dynamics. While core inflation tends to be stickier, this historical relationship makes clear that sustained declines in energy prices often foreshadow broader disinflationary trends.

250507Z4.jpg

**Intangibles versus tangibles** 
Shifting focus from short-term cyclical risks to longer-term structural dynamics, the next chart below underscores a fundamental transformation in the composition of US investment: the economy has increasingly been built on intangibles. Over the past several decades, investment in intangible assets—such as software, intellectual property, R&D, and brand equity—has steadily climbed and, since the mid-2010s, has overtaken investment in both structures and equipment as a share of GDP. This shift reflects the rise of a knowledge-based, innovation-driven economy, but it also introduces new forms of vulnerability. Unlike physical capital, intangible assets rely heavily on trust, reputation, legal protections, and global openness. In this context, escalating trade frictions and a more confrontational US economic stance—as signalled by the recent tariff wave—risk eroding the goodwill and institutional credibility that underpin much of the value created by intangibles. If geopolitical uncertainty undermines the perceived reliability of US intellectual property protections or weakens global collaboration, it could pose a deeper structural challenge to future growth than any immediate cyclical downturn.

250507Z5.jpg

**Investment in Artificial Intelligence**
The centrality of intangibles to the US growth model is nowhere more evident than in the explosion of private investment in artificial intelligence. As this chart illustrates, global AI investment has surged over the past decade—reaching new highs in 2024—and the United States has consistently accounted for the lion’s share of that spending. This reflects not only America’s previous leadership in frontier technologies but also its dependence on intangible capital, from algorithms and data infrastructure to human expertise and institutional trust. However, this dominance also underscores the strategic stakes of current policy choices. In an environment of rising trade tensions and potential fragmentation, the foundations of US leadership in AI—cross-border collaboration, data openness, and global market access—could be at risk.

250507Z6.jpg

Financial market sentiment has rebounded in recent weeks, buoyed by signs of de-escalation in the US-led trade war and growing confidence that central banks—particularly the Federal Reserve—will step in with more rate cuts to cushion any fallout. Yet beneath the surface, a more sobering picture of the global economy persists. For example, latest PMI surveys reveal that global business expectations have slumped to their lowest levels since the pandemic, reflecting widespread unease about the growth outlook (chart 1). While supply chain pressures have so far remained contained, suggesting no repeat of the logistical chaos seen during the pandemic (chart 2), the latest Blue Chip Financial Forecasts survey reveals that forecasters are now pencilling in deeper and more widespread monetary easing than previously anticipated—an acknowledgment that demand is faltering (chart 3). Falling oil prices further reinforce this view: they are both a symptom of weakening global demand and a potential source of disinflation, reducing the urgency for central banks to maintain tight policy (chart 4). At the structural level, the US economy's increasing reliance on intangible assets—ranging from intellectual property to reputation—has made it more vulnerable to geopolitical frictions and the erosion of global trust (chart 5). This risk is compounded by America's dominant role in AI investment, a sector symbolic of both its economic strengths and its exposure to international perceptions (chart 6). The longer-term challenge, then, is not just navigating the current downturn, but ensuring that the institutional goodwill and cross-border openness that support the modern US economy are not sacrificed in a more fragmented and uncertain global order.

Charts of the Week: Relief Rally Meets Recession Risk

250507J1.jpg

250507K1.jpg

At today’s meeting of the Federal Open Market Committee, the target range for the Fed funds rate was left unchanged at 4.25% to 4.50%. This followed reductions at three consecutive meetings in the fall of 2024. Rates remain below the high of 5.25% to 5.50% in place in mid-September. Today’s target range matched expectations in the Action Economics Forecast Survey.

The statement following the meeting indicated that, “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”

“The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

The Fed continued, “The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage backed securities.”

250507L1.jpg

250507M1.jpg

- FOMC holds funds rate target at late-December level.
- Risk assessments include higher unemployment & inflation.

FOMC Targeted Funds Rate Range Is Unchanged; Increased Risks Acknowledged

Kathleen Stephansen, CBE

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Consumer credit outstanding rose $10.2 billion (1.9% y/y) during March after declining by $0.6 billion (+1.7% y/y) during February, revised from a decline of $0.8 billion (+1.7% y/y. A $10.0 billion rise had been expected in the Action Economics Forecast Survey. As a percentage of disposable personal income, consumer credit was 22.4% in March, compared to 22.9% one year earlier.

Nonrevolving credit outstanding rose $8.3 billion (1.5% y/y) in March after easing $0.3 billion (1.3% y/y) in February. Nonrevolving credit held by depository institutions declined 7.8% y/y in March after declining 9.0% y/y in February. Finance company debt holdings rose 0.8% y/y, while credit union holdings eased 1.9% y/y in March. Nonrevolving debt held by the federal government rose 3.4% y/y.

In March, revolving credit outstanding, which includes credit cards, rose $1.9 billion (2.9% y/y) following a decline of $0.3 billion (2.9% y/y) in February. Revolving credit outstanding held by depository institutions fell 1.5% y/y. Revolving credit held by finance companies dropped 12.2% y/y, while that held by credit unions rose 3.7% y/y.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

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- Consumer credit rises close to expectations.
- Nonrevolving and revolving credit rise.


U.S. Consumer Credit Rebounded in March

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Mortgage applications increased 11.0% (26.0% y/y) in the week ended May 2, after declining 4.2% in the week ended April 25, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications to purchase a home rose 11.1% (12.9% y/y) in the week ended May 2 after declining 4.4% in the previous week. Loan applications to refinance a home loan also increased 11.1% (51.0% y/y) in the latest week after falling 3.7% in the prior week.

The effective interest rate on a 30-year fixed rate loan of 7.03% in the week ended May 2 compared to 7.08% in the prior week. The effective rate on a 15-year fixed rate loan of 6.34% in the week ended May 2 followed 6.36% in the prior week. The rate on a 30-year jumbo loan declined to 6.99% in the latest week from 7.06% in the prior week, while the rate on a 5-year ARM eased	to 6.08% in the week ended May 2 from 6.12% in the prior week.

The share of applications to refinance an existing mortgage slipped to 37.1% in the week ended May 2 from 37.3% in the prior week. The share of loans with an adjustable rate rose to 8.3% in the latest week from 7.4% one week earlier.

The average size of a mortgage loan rose 4.2% (3.8% y/y) to $400,200 in the week ended May 2, after slipping 0.7% to $384,100 in the prior week. The average size of a loan to purchase a home increased 1.0% (0.2% y/y) to $444,300 in the latest week from $440,100 in the week prior. The average size of a loan to refinance an outstanding mortgage increased 12.3% (27.6% y/y) last week to $325,400 from $289,800 one week earlier.

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

- Purchase & refinancing loan applications jump.
- Effective interest rates remain range-bound.
- Average loan size increases.

Mortgage Applications Surge as Interest Rates Ease Last Week

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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.

Economy in Brief: April 2008

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