Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020628a.jpg" width="353">
Personal income rose as expected last month following a slight downward revision to April. Personal consumption expenditures fell as expected. April&#39;s gain was unrevised. 
Wage and salary disbursements rose 0.4% (1.9% y/y) in May, the strongest monthly increase this year, following no change in April. 
Personal spending fell due to lower spending on both durable and nondurable goods. Unit sales of light vehicles fell 9.5% m/m to 15.6M. Spending on services rose 0.7% (5.2% y/y).
Disposable income rose 0.3% (5.8% y/y), the same as in April. 
The PCE price deflator fell (1.0% y/y) for the first month since December. Less food and energy the price deflator also fell but more slightly (1.6% y/y) following an unrevised 0.2% April increase.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.3%</td>
<td>0.2%</td>
<td>3.0%</td>
<td>4.9%</td>
<td>7.0%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>4.0%</td>
<td>5.0%</td>
<td>7.7%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>3.1%</td>
<td>2.8%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>1.0%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">PCE Price Deflator</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>1.0%</td>
<td>1.9%</td>
<td>2.7%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Better Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 28, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020628b.jpg" width="353">
The June reading of Consumer Sentiment from the University of Michigan came in higher than suggested by a lower reading in mid-June. A full-month figure of 90.8 had been expected.
Nevertheless, sentiment remained near the low end of 90.7-96.9 range it has fluctuated in this year.
Indexes of both expectations and current conditions fell.
The University of Michigan survey is not seasonally adjusted.
During the past five years there has been a 37% correlation between the level of consumer sentiment and the 3-month change in real PCE.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">Univ. of Michigan</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
<tbody>
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<td class="firstcol">Consumer Sentiment</td>
<td>92.4</td>
<td>96.9</td>
<td>-0.2%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 28, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020628c.jpg" width="353">
The Chicago Purchasing Manager&#146;s Index of Business activity fell slightly more than expected in June. Nevertheless, the index remained at its second highest level of the year. 
The index of new orders fell, but production, inventories and employment rose. 
The index of vendor performance fell, indicating that supplier delivery speeds quickened after a sharp slowing in May. 
The prices paid index was roughly unchanged. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Business Barometer</td>
<td>58.2</td>
<td>60.8</td>
<td>42.6</td>
<td>41.4</td>
<td>51.8</td>
<td>56.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>58.2</td>
<td>58.3</td>
<td>50.9</td>
<td>50.5</td>
<td>65.6</td>
<td>57.6</td>
</tr>
</tbody>
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Personal income rose as expected last month following a slight downward revision to April. Personal consumption expenditures fell as expected. April's gain was unrevised. Wage and salary disbursements rose 0.4% (1.9% y/y) in May, the [...]

Personal Income Up, Spending Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020627b.jpg" width="353">
GDP growth last quarter was revised up versus Consensus expectations for no change from the 5.6% growth reported previously. Regular annual revisions extending back several years will occur next month.
The upward revision reflected less of a drag from net export deterioration and firmer domestic final demand.
Trade sector deterioration sapped less from GDP growth. Export growth was revised down sharply to 2.8% but import growth was revised down more to 8.3%.
Real PCE was little changed at 3.3% (AR). Residential investment also was unchanged rising at a 14.6% rate. The decline in fixed capital investment was lessened to 6.2%. Spending on equipment and software rose for the first quarter since 3Q 2000. Government investment was unrevised at 6.7%.
Production increases to slow the rate of inventory decumulation were little revised and added 3.4 percentage points to GDP growth. 
Inflation remained low in 1Q but revised up slightly.
Corporate profit growth was revised up slightly to 2.9% (AR) following a 93.4% surge in 4Q01.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained &#39;96 $, % AR</a></th>
<th scope="col">1Q&#39;02 (Final)</th>
<th scope="col">1Q&#39;02 (Prelim)</th>
<th scope="col">4Q &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">GDP</td>
<td>6.1%</td>
<td>5.6%</td>
<td>1.7%</td>
<td>1.7%</td>
<td>1.2%</td>
<td>4.1%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>3.4%</td>
<td>3.5%</td>
<td>-2.0%</td>
<td>0.1%</td>
<td>-1.1%</td>
<td>-0.2%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.6%</td>
<td>2.0%</td>
<td>3.8%</td>
<td>1.6%</td>
<td>2.3%</td>
<td>4.3%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-0.8%</td>
<td>-1.1%</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.2%</td>
<td>3.0%</td>
<td>3.9%</td>
<td>1.9%</td>
<td>2.3%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Deflator</td>
<td>1.2%</td>
<td>1.0%</td>
<td>-0.1%</td>
<td>1.4%</td>
<td>2.2%</td>
<td>2.3%</td>
<td>1.4%</td>
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</tbody>
</table>
Jobless Insurance Claims Fell, Rehiring May Have Improved 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 27, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020627a.jpg" width="353">
Initial claims for unemployment insurance fell about as expected in the latest week. The prior week&#39;s level was revised up slightly.
In a sign that rehiring may have risen, continuing claims for unemployment insurance fell sharply from the prior week&#39;s level which was revised down. Continuing claims have fallen 3.3% from the high reached in early May.
The four-week moving average of initial claims fell to 391,000, -2.8% y/y. 
The insured rate of unemployment was stable at 2.9% for the third consecutive week.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">6/22/02</th>
<th scope="col">6/15/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Initial Claims</td>
<td>388.0</td>
<td>398.0</td>
<td>1.0%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,706</td>
<td>24.2%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
Fed Leaves Interest Rates Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 27, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020627c.jpg" width="353">
The Federal Reserve left the Federal Funds Target Rate unchanged at 1.75%, as expected. 
The press release, which accompanied the Fed&#146;s action, contained the following statement. &quot;The Committee expects the rate of increase of final demand to pick up over coming quarters, supported in part by robust underlying growth in productivity, but the degree of the strengthening remains uncertain.&quot;
The complete text of the Fed&#39;s latest press release can be viewed at <a href="http://www.federalreserve.gov/BoardDocs/Press/monetary/2002/20020626/default.htm">http://www.federalreserve.gov/BoardDocs/Press/monetary/2002/20020626/default.htm</a>

Help Wanted Advertising Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 27, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020627d.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising fell unexpectedly in May. A decline in continuing claims for unemployment insurance may have suggested improved rehiring, but the drop in help wanted suggests any improvement will not be large. 
During the past ten years there has been a 91% correlation between the level of help-wanted advertising and the annual change in nonfarm payrolls. 
Job opportunities deteriorated across the nations&#39; regions, but notably in the West South Central (Texas &amp; Oklahoma) and in the East North Central (Illinois &amp; Ohio) regions.
The figures are seasonally adjusted.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">May &#39;02</th>
<th scope="col">April &#39;02</th>
<th scope="col">May &#39;01</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nat&#39;l Help Wanted Index</td>
<td>45</td>
<td>47</td>
<td>60</td>
</tr>
</tbody>
</table>
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GDP growth last quarter was revised up versus Consensus expectations for no change from the 5.6% growth reported previously. Regular annual revisions extending back several years will occur next month. The upward revision reflected [...]

Strong 1Q GDP Revised Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020626b.jpg" width="353">
Durable goods orders rose as expected last month. April figures were revised down.
Orders for nondefense capital goods rose strongly and were boosted by a 31.3% gain in aircraft orders (down 54.1% in April). Excluding aircraft, nondefense capital goods orders rose 0.2% following a 5.6% rise in April.
Orders for computers and electronic products rose 1.0%, the third consecutive monthly gain. Machinery orders fell slightly following a 4.5% April gain. Orders for electrical equipment also fell, down 2.2% after a 10.3% April surge.
Orders for defense goods fell 9.7% after dropping 46.6% in April. Excluding defense, durable orders rose 0.8% (-1.3% y/y) after a 3.7% April gain.
Durable shipments fell slightly, up 5.8% from the low last September.
Durable inventories fell 0.6% and the April decline was revised deeper.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Durable Goods Orders</td>
<td>0.6%</td>
<td>0.4%</td>
<td>-1.6%</td>
<td>-11.4%</td>
<td>3.3%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>3.3%</td>
<td>1.4%</td>
<td>-6.6%</td>
<td>-16.5%</td>
<td>7.9%</td>
<td>3.9%</td>
</tr>
</tbody>
</table>
May New Home Sales Surge to Record Level 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 26, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020626a.jpg" width="353">
Sales of new single family homes rose much more than expected last month. April sales were revised higher with sales up 12.3% in the last two months.
May sales of 920,000 were expected.
Sales were up in each of the country&#146;s regions with double-digit m/m gains in the Northeast and South.
The median price of a new home fell 8.8% to $170,200 (-2.9% y/y).
The new home sales data reflect current sales versus the existing home sales figure which reflect closings on past sales. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">New Single-Family</td>
<td>1,028</td>
<td>951</td>
<td>16.3%</td>
<td>908</td>
<td>880</td>
<td>879</td>
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Durable goods orders rose as expected last month. April figures were revised down. Orders for nondefense capital goods rose strongly and were boosted by a 31.3% gain in aircraft orders (down 54.1% in April). Excluding aircraft, [...]

Durable Goods Orders Rose

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020625b.jpg">
The Conference Board&#146;s Index of Consumer Confidence fell in June, slightly more than expected. May&#39;s level was revised up slightly. 
The 3.5% m/m decline in the Conference Board measure was less than the decline in the mid-month Sentiment reading from the University of Michigan. Nevertheless, it was the largest monthly drop in Confidence since October. 
The 2Q02 level of Consumer Confidence was the highest since 3Q01. 
The Conference Board&#39;s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Consumer Confidence</td>
<td>106.4</td>
<td>110.3</td>
<td>-10.5%</td>
<td>106.6</td>
<td>139.0</td>
<td>135.3</td>
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Existing Home Sales Down Just Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2002


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020625c.jpg">
May sales of existing single family homes fell 0.3% versus April that was revised down slightly. Sales during the first five months of 2002 were up 8.2% from the first five months of 2001.
Home sales were mixed across the country&#146;s four regions: up in the Midwest and West, down in the Northeast and South.
The median price of an existing home rose slightly to $154,600 (6.6% y/y). The April figure was revised higher.
The figures reflect closings of past sales. 
The average rate on a conventional 30-year mortgage fell to 6.81% last month from 7.07% in December.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;5,750</td>
<td>&nbsp;5,770</td>
<td>6.5%</td>
<td>5,291</td>
<td>5,159</td>
<td>5,193</td>
</tr>
</tbody>
</table>
 Chain Store Sales Improved 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020625a.jpg" width="353">
Chain store sales rose 0.5% in the third week of June according to the BTM-UBSW survey. It was the fourth consecutive weekly rise.
So far in June sales are up 2.1% from the May average.
The leading indicator of chain store sales published by BTM rose slightly in the second week of June, recouping a part of the decline the prior week.
During the last ten years there has been a 40% correlation between the year-to-year percent change in monthly chain store sales and the change in general merchandise store sales.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">6/22/02</th>
<th scope="col">6/15/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>416.7</td>
<td>414.6</td>
<td>4.9%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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The Conference Boards Index of Consumer Confidence fell in June, slightly more than expected. May's level was revised up slightly. The 3.5% m/m decline in the Conference Board measure was less than the decline in the mid-month [...]

Consumer Confidence Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020624a.jpg" width="353">
Capital goods orders less the volatile aircraft sector have risen 8.7% from the monthly low reached last September. An improved economy and higher corporate profits account for the gain.
Despite the gain, the capital goods sector is hardly strong. At 5.5% (AR), the three-month growth rate is roughly half the rates of the mid-to-late 1990s.
Growth in computers &amp; electronics is up, but 7.2% growth is well below the supercharged 1990s.
Orders for electrical equipment have recovered more than have computer orders but machinery orders have only just hit bottom.
The sub-series listed below contain some defense components.

<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/@ED01017/@ED01017.HTM">Nondefense Capital Goods Orders</a> (SA)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total less Aircraft</td>
<td>$53.1B</td>
<td>$50.9B</td>
<td>-6.1%</td>
<td>-14.2%</td>
<td>5.9%</td>
<td>4.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Electrical Equipment &amp; Appliances</td>
<td>9.5B</td>
<td>8.7B</td>
<td>-4.4%</td>
<td>-7.7%</td>
<td>3.8%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Computers &amp; Electronics</td>
<td>26.8B</td>
<td>26.0B</td>
<td>-2.9%</td>
<td>-24.3%</td>
<td>8.2%</td>
<td>8.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Machinery</td>
<td>22.2B</td>
<td>21.5B</td>
<td>-3.5%</td>
<td>-7.1%</td>
<td>8.0%</td>
<td>0.2%</td>
</tr>
</tbody>
</table>
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Capital goods orders less the volatile aircraft sector have risen 8.7% from the monthly low reached last September. An improved economy and higher corporate profits account for the gain. Despite the gain, the capital goods sector is [...]

Capital Spending on the Mend

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020621a.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising rose slightly in April. The modest decline in continuing claims for unemployment insurance may suggest hiring improvement when the May help-wanted figures are released, but it likely will not be large. 
During the past twenty years there has been a 40% correlation between the monthly change in help-wanted advertising and the change in continuing claims. The correlation between the one-year percent changes is 89%. 
Job opportunities improved in the Middle Atlantic and East North Central regions of the country but remained weak elsewhere.
The figures are seasonally adjusted.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">April &#39;02</th>
<th scope="col">Mar &#39;02</th>
<th scope="col">April &#39;01</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nat&#39;l Help Wanted Index</td>
<td>47</td>
<td>46</td>
<td>65</td>
</tr>
</tbody>
</table>
Inflation Prospects: Low But Rising 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 21, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020621b.jpg" width="353">
The recent rally in the market for ten-year notes has been prompted both by a flight to quality and a reduced probability of near term Fed tightening. The flattening of the spread between the 10 Year and the Fed funds rate indicates that the market views the inflationary consequences of no Fed action as diminished. 
Nevertheless, the Future Inflation Gauge (FIG) published by the Economic Cycle Research Institute (ECRI) has moved higher recently. It is designed to signal turns in the inflation rate with a median lead of nine months. 
The FIG utilizes indications from commodity and labor markets, capacity measures, import prices, the yield curve, debt and real estate markets.

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The Conference Board's National Index of Help-Wanted Advertising rose slightly in April. The modest decline in continuing claims for unemployment insurance may suggest hiring improvement when the May help-wanted figures are released, [...]

Help Wanted Advertising Up Slightly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020620d.jpg" width="353">
The U.S. foreign trade deficit deepened more than expected in April. March&#39;s deficit was revised deeper as were deficits for prior years. 
The trade deficit in 1Q averaged $31.6B, deeper than originally estimated. The degree of deterioration versus 4Q01 was lessened since the 4Q deficit was revised more. 
Imports rose sharply as imports of industrial supplies were boosted by higher oil prices and quantities. Imports of nonauto capital goods rose 1.5%, the fourth strong consecutive monthly increase. Imports of nonauto consumer goods also were strong for the third month in four. Automotive imports also surged.
Exports rose sharply due to across-the-board gains except for capital goods (-12.9% y/y) that were unchanged and food.

<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/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$35.9B</td>
<td>$32.5B</td>
<td>$32.4B(4/01)</td>
<td>$358.3B</td>
<td>$378.7B</td>
<td>$261.8B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>2.2%</td>
<td>1.2%</td>
<td>-7.2%</td>
<td>-6.2%</td>
<td>11.2%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>4.7%</td>
<td>0.5%</td>
<td>-2.2%</td>
<td>-6.0%</td>
<td>18.3%</td>
<td>10.9%</td>
</tr>
</tbody>
</table>
1Q Current Account Deficit A Record 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 20, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020620b.jpg" width="353">
The US current account deficit deepened sharply last quarter to a record level. The deterioration versus 4Q01 was greater than expected. Prior year&#39;s figures were revised. 
A record deficit in goods, services and income trade was driven by sharp deterioration in goods and services trade while a surplus in the income balance swung to deficit.
Exports of goods and services rose slightly for the first gain in six quarters but income receipts fell sharply for the fifth straight quarter. 

<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/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">1Q &#39;02</th>
<th scope="col">4Q &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account Deficit</td>
<td>$112.5B</td>
<td>$95.1B</td>
<td>$116.3B</td>
<td>$417.4B</td>
<td>$444.7B</td>
<td>$324.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % of GDP</td>
<td>4.3%</td>
<td>3.7%</td>
<td>4.3%</td>
<td>3.9%</td>
<td>4.2%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Deficit on Gds, Serv &amp; Income</td>
<td>$96.6B</td>
<td>$81.5B</td>
<td>$96.1B</td>
<td>$343.9B</td>
<td>$356.9B</td>
<td>$244.1B</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>-0.1%</td>
<td>-5.8%</td>
<td>-16.5%</td>
<td>-9.6%</td>
<td>13.6%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>4.0%</td>
<td>-3.9%</td>
<td>-12.8%</td>
<td>-8.4%</td>
<td>18.9%</td>
<td>10.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$15.9B</td>
<td>$13.6B</td>
<td>$11.6B</td>
<td>$49.5B</td>
<td>$53.4B</td>
<td>$48.8B</td>
</tr>
</tbody>
</table>
Leading Indicators Resume Rise 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 20, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020620c.jpg" width="353">
The Composite Index of Leading Economic Indicators rose more than expected last month to a new high. The April decline was lessened slightly. 
The ratio of coincident to lagging indicators rose sharply, an indication that excesses in the economy are falling relative to the economy&#39;s actual performance.
60% of the leaders&#39; component series rose last month versus only 40% rising in April. A decline in claims for jobless insurance and a rise in the money supply had the largest positive influence.
The Leading index is based on eight previously reported economic data series and two that are estimated.

<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/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.4%</td>
<td>-0.3%</td>
<td>2.7%</td>
<td>-0.6%</td>
<td>1.0%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2%</td>
<td>-0.5%</td>
<td>-5.5%</td>
<td>-1.3%</td>
<td>2.8%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
Jobless Insurance Claims Fell Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 20, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020620a.jpg" width="353">
Initial claims for unemployment insurance fell slightly in the latest week, about as expected. The prior week&#39;s level was revised up.
The latest claims data is for the June survey period for nonfarm payrolls. Initial claims are down 29,000 versus the May period, a decline influenced by the expiration of the extended benefits program
Continuing claims for unemployment insurance rose for the first week in five. The prior week&#39;s level was revised down sharply.
The four-week moving average of initial claims fell to 396,250, -3.2% y/y. 
The insured rate of unemployment was stable at 2.9%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">6/15/02</th>
<th scope="col">6/8/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>393.0</td>
<td>395.0</td>
<td>-1.3%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,775</td>
<td>26.6%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 20, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020620e.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions for June surged more than expected to its highest level since June 1998.
New and unfilled orders surged while inventories fell at a lesser rate. Delivery lead times lengthened for only the third month this year. 
The business conditions index reflects a separate survey question, not the components. 
Pricing pressure firmed to the highest level since September 2000.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>22.2</td>
<td>9.1</td>
<td>-5.0</td>
<td>-17.3</td>
<td>8.2</td>
<td>13.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>22.9</td>
<td>19.7</td>
<td>16.5</td>
<td>-1.0</td>
<td>27.1</td>
<td>10.0</td>
</tr>
</tbody>
</table>
May U.S. Budget Deficit Rose 
by <a href="/comment/Moeller.html">Tom Moeller </a> June 20, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020620f.jpg" width="353">
The US budget deteriorated somewhat more than expected last month. May&#39;s fiscal YTD deficit was the largest since 1994. 
Receipts fell sharply m/m following tax filings on April 15. Fiscal YTD individual income taxes were down 20.4% versus last year, reflecting higher unemployment. Fiscal YTD corporate taxes fell 17.1% versus last year. 
Growth in expenditures remained strong lifted by higher spending on defense (15.7% YTD), education (15.6% YTD) and income security (17.9% YTD). 

<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/@E1/@E106/@E10602/@E10602.HTM">US Government Finance</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Fiscal YTD</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-80.6B</td>
<td>$67.2B</td>
<td>$-147.1B</td>
<td>$127.2B</td>
<td>$236.9B</td>
<td>$124.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$102.5B</td>
<td>$137.4B</td>
<td>-11.6%</td>
<td>-1.7%</td>
<td>10.8%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$183.1B</td>
<td>$170.3B</td>
<td>10.0%</td>
<td>4.2%</td>
<td>5.0%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
</body>
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The U.S. foreign trade deficit deepened more than expected in April. March's deficit was revised deeper as were deficits for prior years. The trade deficit in 1Q averaged $31.6B, deeper than originally estimated. The degree of [...]

U.S. Trade Deficit a Record in April

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020619a.jpg" width="353">
The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) fell in early June. The decline reversed much of the index&#39;s forward progress in May.
Despite the latest decline, the leading index&#39;s six-month growth rate improved to its highest level since early 2000.
Construction of the ECRI Leading Index is quite different from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been an 80% correlation between the annual percent change in the two over the last 20 years.
The components of the index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy&#39;s growth rate.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/weekly/@W8/@W801/@W801.HTM">ECRI</a></th>
<th scope="col">6/07/02</th>
<th scope="col">5/31/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Weekly Leading Index</td>
<td>122.4</td>
<td>124.2</td>
<td>0.8%</td>
<td>-5.0%</td>
<td>0.8%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
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The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) fell in early June. The decline reversed much of the index's forward progress in May. Despite the latest decline, the leading index's [...]

ECRI Leaders Stutter, Growth Rate Rose

Sticky services prices behind sticky overall PCE inflation

Flash April PMIs point to slower growth in the US but a pickup in Europe and Japan

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

Inflation surprising to upside in the US; by contrast to the downside in the euro area

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

Fiscal-policy aided factory building in the U.S. provided an unusually large boost to growth last year

US consumers much more optimistic than those in the Euro area and the UK

  Job openings take a step down in 2024

Fed's super core services inflation measure pushing up core rate

Blue Chip forecasters expect significant monetary easing this year except in Japan

Euro area economy stagnating while US grows above trend

Chinese and Japanese equity markets are diverging markedly

Chinese population declines in 2023 for second consecutive year

Outlook for US GDP growth on the rise; declining in euro area, Japan and China

There are still 1.4 job openings for every unemployed person in the US

US PCE inflation over the past six months has slowed to the Fed's 2% target

FOMC think rate hikes are done and looks for 75bps of decline in 2024

Weaker economic data surprises pushing down US interest rates

Recent disinflation has been widespread across Europe and North America

Recent decline in US inflation expectations helping to lower interest rates

China is losing its luster as foreign direct investment heads out

Blue Chip forecasters think Fed will be tighter for longer

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% (+2.7% y/y) during the four weeks ended May 3, 2024, after exhibiting strength since December. The index remained 20.1 % below the cycle peak in the second week of March 2022. During most of that period of time, U.S. factory output has been little changed.

Prices in the miscellaneous group fell 4.9% during the last four weeks and weakened 0.7% y/y. Plywood prices fell 14.4% and by 4.8% y/y. The cost of natural rubber fell 11.2% in four weeks but rose by nearly one-third y/y.

Textile group prices declined 2.5% (-0.7% y/y) in the latest four weeks but had been rising since their low in the second week of November. Cotton prices decreased 15.7% (-9.3% y/y) in the last four weeks but the cost of burlap rose 1.8% (8.0% y/y) in four weeks.

Prices in the crude oil & benzene group weakened 2.1% (+6.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 4.2% in four weeks to $81.28 per barrel, up 11.5% y/y. Prices hit a low of $70.42 in the third week of December. The cost of the petro-chemical benzene, used for making plastics & synthetic fibers, declined 2.7% (+13.4% y/y) in four weeks. Excluding crude oil, the industrial commodity price index rose 0.2% (2.1% y/y) in the latest four-week period.

Offsetting these declines, metals group prices increased 9.8% (7.9% y/y) over the most recent four weeks. Zinc prices rose 17.6% (8.7% y/y) while tin prices improved 15.1% in four weeks, up 20.4% y/y. Copper scrap prices increased 10.4% (15.2% y/y) in the last four weeks and aluminum prices improved 9.6%, rising9.0% y/y. Lead prices improved 8.2% (0.9% y/y) in four weeks while the cost of steel scrap rose 0.3% (-4.2% y/y).

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Lumber & rubber costs have fallen sharply. 
- Cotton prices show protracted decline. 
- Crude oil prices weaken for three weeks.
- Metals price increase, paced by zinc and tin.

FIBER: Industrial Commodity Prices Slip in Latest Four Weeks

Robert Brusca

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April readings for the S&P total or composite PMI survey show mixed performance in April with more countries showing deterioration month-to-month than showing improvement, but with the average reading in April higher than the average reading in March. That makes it a bit of a standoff in terms of trying to assess the performance of the survey. More countries are doing worse but on average countries are doing better.

These tendencies are provided without any weighting for the country’s GDP size; that's another caveat. Looking at the United States, the European Monetary Union, and the EMU’s four largest members as though they are all separate and independent observations (which they are not) shows two worsening was in April with the same relative results in March; February shows only one worsening and five improving.  Those are certainly good statistics and good news since these are large economies carrying a large weight in terms of their contribution to world output.

In Asia, Japan, and China show different performance with China improving month-to-month in February, March, and April but with Japan worsening month-to-month in April and February but improving in March.

Turning to sequential data that look at averages and changes over three months, six months and 12 months, we find the highly developed European and the U.S. readings all improving over three months; however, four of six of those readings deteriorate over six months compared to 12 months. Three deteriorate and three improve on balance over 12 months compared to the average ending 12 months ago.

We also assess the performance of these countries by looking at their PMIs in a queue of ranked data since January 2020. In that queue, Italy and Spain have 70th percentile standings, above their historic medians (medians occur at a ranking of 50%) along with the European Monetary Union with a 53.1 percentile ranking. However, the United States has a 36.7 percentile ranking, Germany, a 40.8 percentile ranking, and France, a 46.9 percentile ranking; that leaves us with three readings above their median and three below for the full period assessment.

Over the entire sample, the averages from February to March to April cluster in a very tight range from 52.0 to 52.5; the median lies in a range of 51.3 to 52.7. Over those three months, there are 4 of the countries in the survey below a reading of 50 which means they're contracting in April. Six are contracting, in March and six are contracting in February. The averaged data show improvements from three-, six-, and 12-months. On those metrics, nine countries contract over three months, 11 contract over six months, and 11 contract over 12 months.

Turning to statistics on acceleration, we find that 52% of countries are slowing in April but only 44% in March and only 32% in February. The averages are fairly stable; there are deteriorating circumstances in terms of the proportion of countries showing readings below the month before and on a month-to-month basis. Looking at the sequential data for three months compared to six-months, six months compared to 12 months, and 12 months compared to 12-months ago, the percentage of countries slowing steadily diminishes from nearly 70% over 12 months to 56.5% over six months to 30.4% over three months. The broad picture shows less slowing while the monthly picture shows that there may be more slowing creeping into the process.

The average queue standing, which positions these countries in their queue of data since January 2020, is at 51.6%. Across our sample of 25 countries, 12 of them show readings below their respective 50th percentile rankings. This gives us a sense that across the sample based on the ranking data and the average of the PMI data statistics are hovering close to the median for the period. However, this is comparison over a four-year period that has seen a good deal of contraction in play.

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On balance, the sense of improvement in this sample is not very strong. There is some progress evident; however, there's still obviously widespread weakness that permeates this system so it's hard to look at the month's data as anything special based upon the composite PMIs. Services sectors show a moderate trend for improvement monthly although stability across the averages from three-, to six-, to 12-months is most evident for services. The services queue percentiles are still relatively robust with an average standing in their 65th percentile. Manufacturing sectors are generally doing worse with an average percentile standing at their 47th percentile, below their medians and with a median diffusion reading slightly below fifty at 49.8 in April.

Goods and services sectors continue to perform in different fashion; the goods sector, the internationally traded sector, continues to be under more pressure. Of course, inflation statistics have improved but if the U.S. is setting the lead for inflation performance, that performance has stalled and there's evidence of inflation progress slowing in other places. This will be something that we will want to watch because it will bear importantly on how central banks perform and what they do in the future.

PMI Composite Readings Improve Slightly Amid Cross-currents

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Nonfarm payrolls increased 175,000 (1.8% y/y) in April after rising 315,000 in March, revised from 303,000, and 236,000 in February, revised from 270,000. Expectations had been for a 250,000 rise in the Action Economics Forecast Survey. The three-month average change of 242,000 is the slowest since December of	 last year.

Average hourly earnings increased 0.2% in April after an unrevised 0.3% March gain and a 0.1% uptick in February, revised from 0.2%. The 3.9% y/y earnings increase remains below the 5.9% high in March 2022. It is the weakest rise since June 2021.

The unemployment rate, measured in the household survey, rose to 3.9% and reversed its decline to 3.8% in March. An unchanged 3.8% had been expected. Household employment rose 25,000 after increasing 498,000 in March. The labor force rose 87,000 after a 469,000 March gain. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons edged up to 7.4%. It was the highest rate since November 2021.

In the **payroll survey**, private-sector employment increased 167,000 (1.7% y/y) in April after rising 243,000 in March. Construction sector employment increased 9,000 (3.3% y/y) last month following a 40,000 March gain. Factory sector jobs rose 8,000 (0.1% y/y) after falling 4,000. Mining & logging sector jobs fell 3,000 (+0.3% y/y) during April after rising 3,000 in March.

Private service-producing sector employment improved 153,000 in April (1.7% y/y) after a 204,000 March rise. Increases varied greatly amongst service sector categories. Education & health service jobs rose 95,000 (4.3% y/y) after rising 88,000 in March while leisure & hospitality employment rose 5,000 (2.3% y/y) after a 53,000 gain. Trade, transportation & utilities employment gained 52,000 (0.7% y/y) after rising 31,000 while financial activities jobs rose 6,000 (0.5% y/y) after rising 5,000 in March. Information sector employment fell 8,000 (-1.4% y/y) following a 4,000 gain and professional & business service jobs decreased 4,000 (0.5% y/y) after a 10,000 March rise. Within that category, the number of temporary jobs fell 16,400 (-6.0% y/y) and have fallen consistently since a March 2022 high.

Government sector payrolls improved a negligible 8,000 last month (2.8% y/y) after increasing 72,000 in March. Local government jobs held steady (2.4% y/y) after rising 51,000 in March and state government employment rose 6,000 (3.7% y/y) after an 11,000 gain. The number of federal government jobs increased 2,000 (2.9% y/y) following a 10,000 rise.

The 0.2% rise in private-sector average hourly earnings reflected a 0.2% gain (5.1% y/y) in the goods-producing sector which followed a 0.6% improvement in March. Earnings in construction strengthened 0.6% (5.2% y/y) while factory sector earnings eased 0.1% (+4.8% y/y). In the private services-sector, earnings rose 0.2% last month (3.7% y/y) after a 0.3% gain. Information sector earnings edged 0.1% higher (3.4% y/y) following a 0.4% improvement. Financial sector earnings increased 0.4% (6.0% y/y) for the third straight month. Private education & health services earnings rose slightly (2.8% y/y) after holding steady in March. Trade, transportation and utilities pay rose 0.1% (3.4% y/y) in April after a 0.2% rise.

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The length of the average workweek in the private sector eased to 34.3 hours in April after rising to 34.4 hours in March. The workweek in the goods-producing sector fell to 39.7 hours, down from a five-month high of 39.9 hours in March. The construction sector average workweek fell to 38.7 hours from 39.3. The factory sector workweek held steady at 40.0 hours for the third straight month while the average workweek in the private service sector was 33.3 hours, also for the third consecutive month. The aggregate weekly hours index in the private sector, a key indicator of production and income, eased 0.1% in April (1.7% y/y) after rising 0.4% in both of the prior two months.

In the **household survey**, the jobless rate climbed to 3.9% as the size of the labor force rose more quickly than employment. The labor force participation rate held steady at 62.7%. The rate for teenagers declined to 37.6%, while for individuals aged 20-24 it rose to 72.4%. For rate for workers aged 25-54, it edged higher to 83.5% but for workers 55 and over, it fell slightly to 38.4 hours.

The employment/population ratio for all workers slipped to 60.2% in April, standing slightly below where it was twelve months earlier. It remained below its high of 61.1% in February, 2020 just prior to the pandemic.

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

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- Job increase slows to weakest in just over one year.
- Earnings increase moderates.
- Jobless rate moves up as employment increase is negligible.

U.S. Payroll Employment & Wage Growth Moderate in April; Jobless Rate Edges Up

Andrew Cates

**Consensus interest rate forecasts**
Despite heightened concerns about the potential for lower US interest rates in the coming months, recent forecasts still show a broad consensus that an easing cycle will unfold in the period ahead across most major economies. The latest Blue Chip Financial Forecasts survey, for instance, indicates that policy rate reductions of approximately 100 basis points are anticipated from the Fed over the next 12 months. Additionally, the European Central Bank and the Bank of England are expected to implement cumulative cuts of 166 and 111 basis points, respectively, during the same timeframe. In contrast, Japan is expected to see further rate hikes, specifically an increase of 17 basis points over the year ahead.

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**US data surprises and 2 year bond yields**
The anxiety in financial markets about the Fed’s scope to lower interest rates can be largely traced to the US economy’s resilience – and its tight labour market in particular – together with sticky inflation. The former, however, namely economic resilience, has arguably being challenged in recent days by some, though by no means all, US data releases. These include, for example, a weaker-than expected consumer confidence report and ISM survey of manufacturing. Citigroup’s US growth surprise index has, against that backdrop, turned sharply lower.

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**US and euro area data surprises versus the euro**
A corresponding trend has also unfolded in the FX market. While US data have been a little more disappointing this contrasts with euro area data, which have been more resilient. Yet, thanks to still-firm US/Europe yield differentials, the US dollar has remained fairly resilient versus the euro (see chart 3).

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**Japan’s economy**
This week’s disappointing retail sales data from Japan could call into question the scope for further policy rate hikes from the Bank of Japan (BoJ) in the coming months. Retail sales specifically slowed to 1.2% y/y in March from 4.7% in February. That slowdown, moreover, was broadly-based, with reduced sales activity seen across various product categories.

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**Airport traffic in China**
The latest monthly dataflow from China have been a little more upbeat but that was not the message from this week’s official PMI surveys for April. Other less widely monitored data are also yielding sobering messages about the current economic environment. For instance, while aircraft movements at Beijing Airport have risen from their low points, they still remain well below pre-COVID pandemic levels (see chart 5). Similarly, specific data on cargo volumes and passenger traffic lead to the same conclusion.

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**Global warming and water levels**
Finally, on more structural matters, climate change continues to generate profound shifts in the economic landscape, influencing everything from agricultural productivity to energy markets and global supply chains. One manifestation of these shifts is low water levels in many areas and for example, in the Panama Canal. More specifically Gatun Lake has seen prolonged drought conditions, exacerbated by the El Niño phenomenon and broader climate change anomalies. The drought has resulted in lower-than-average rainfall and delayed rainy seasons, leading to reduced water availability not only for canal operations but also for over half of Panama's population relying on this water source. To that supply chain point above, the canal has also had to reduce the number of ships it can accommodate per day.

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Lingering concerns about the US Fed's inclination to lower interest rates in coming months have continued to unsettle financial markets over the past few days. That said, comments from Fed Chair Powell after this week’s FOMC meeting have calmed some of those nerves. In our charts this week we delve into the latest Blue Chip consensus on policy rates across the world’s major economies (chart 1). We also compare market expectations for US policy rates, inferred from 2-year Treasury yields, with a trend toward more negative US data surprises in recent days (chart 2). In addition we contrast that more negative US growth trend with the relative resilience of the euro area dataflow and some recent downward pressure on the EUR/USD exchange rate (chart 3). Turning to Asia, we assess Japan's economy with a focus on some recent disappointing retail sales data (chart 4), and provide insights into China's economic activity through aircraft movements at Beijing Airport (chart 5). Finally, and with a nod to climate change and its impact, we look at reduced water levels on the Panama Canal and how these contrast with above-average land and sea temperatures over the past few years (chart 6).

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Charts of the Week: Policy Surprises Versus Data Surprises

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The U.S. trade deficit in goods and services (BOP basis) of $69.4 billion in March compared to a $69.5 billion in February, revised from $68.9 billion, and an unrevised $67.6 billion in January, according to the U.S. Census Bureau. The deficit remained nearly the largest since April 2023 which was $72.2 billion. A $69.1 billion deficit had been expected in the Action Economics Forecast Survey. Exports fell 2.0% and were roughly unchanged y/y, reversing a 2.2% February rise. Imports declined 1.6% (+3.1% y/y) in March, following three straight months of moderate gain.

The deficit in goods trade (BOP basis) increased to $92.5 billion in March from $91.7 billion in February. Goods exports fell 2.9% (-2.8% y/y) after rising 2.8% in February. Imports of goods declined 1.6% (+2.5% y/y) following three straight monthly increases. The services trade surplus increased to $23.1 billion in March from $22.2 billion in February but remained down from a peak surplus of $25.2 billion last August. Services exports eased 0.2% (+6.0% y/y) following four consecutive monthly increases. Services imports declined 1.7% (+5.4% y/y) after rising 4.7% in February.

The real (inflation-adjusted) goods trade deficit (customs value; chained 2017 dollars), widened to $88.6 billion in March, the largest deficit since April of last year, from $87.4 billion in February. Real exports of goods declined 3.2% (-0.7% y/y) after rising 2.0% in February. Real imports of goods fell 1.5% (+2.5% y/y) after three straight monthly increases. In the first quarter of this year, a widening of the trade deficit (net exports) subtracted 0.86 percentage points from GDP growth after adding 0.25 percentage points to growth in Q4 2023.

The customs value goods trade deficit widened to $91.5 billion in March from $90.5 billion in February. The latest figure compared to a $91.8 billion deficit in the advance report released on April 25. Customs value exports fell 3.0% (-1.7% y/y) in March after a 2.8% February increase. Automotive vehicles, parts & engines rose 0.6% (-1.7% y/y) while nonfood consumer goods excluding autos declined 1.8% (-5.1% y/y). Capital goods exports excluding autos weakened 3.7% (+3.1% y/y) while exports of industrial supplies & materials fell 3.0% (-4.1% y/y). Foods, feeds & beverages exports were off 8.2% (-1.5% y/y).

Customs value imports of goods declined 1.6% (+2.6% y/y) in March after increasing for three straight months. Automotive vehicles, parts & engines imports fell 11.1% (+6.1% y/y) while capital goods imports excluding autos rose 0.1% (7.4% y/y). Foods, feeds & beverage imports declined 3.5% (+5.2% y/y). Imports of industrial supplies & materials fell 2.9% (-7.0% y/y) but nonfood consumer goods excluding autos rose 4.8% (4.1% y/y). Meanwhile, petroleum imports declined 2.5% and were unchanged y/y in March, following a 1.6% February rise. Nonpetroleum imports weakened 1.5% (+2.8% y/y) following three straight monthly increases.

The rise in services exports reflected a 0.7% increase (12.4% y/y) in personal, cultural & recreational services and a 1.3% decline (+24.9% y/y) in travel services exports. Exports of construction services declined 1.3% (+2.6% y/y) while government goods & services exports declined 0.9% (-23.0% y/y). The increase in services imports was due to construction services imports which rose 1.0% (35.1% y/y) but travel services imports fell 2.6% (+21.7% y/y). Imports of transport services declined 5.8% (-0.1% y/y) while charges for the use of intellectual property eased 0.1% (+3.2 y/y) in March.

The U.S. goods trade deficit with China widened to a seasonally adjusted $24.1 billion in March from $21.9 billion in February. Exports fell 3.6% (-10.3% y/y) while imports rose 4.8% (unchanged y/y). The goods trade deficit with the European Union deepened to $19.5 billion from $17.6 billion in February as exports fell 3.4% (-6.4% y/y), off for the third straight month, and imports rose 1.8% (4.2% y/y). The trade deficit with Japan narrowed to a seasonally adjusted $5.3 billion in March after narrowing to $6.2 billion in the previous month. Exports declined 1.9% (+3.0% y/y) while imports fell 8.7% (-2.2% 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** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Exports and imports both fall.
- Adjusted for inflation, goods trade deficit increases to eleven-month high.
- Goods trade deficits with China & Europe deepen.

Economy in Brief: June 2002

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