Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602d.jpg" width="353">
For the last several months, we have been working to expand and reorganize Haver&#39;s EMPL database, which consists of the BLS&#39;s massive collection of details on the Household Employment Survey. We&#39;ve recoded the entire database, hopefully making the codes simpler, more intuitive and less like serial numbers. We&#39;ve added about 1,700 new series, including more detail on employment of various resident Hispanic groups, such as Puerto Ricans. There is also greater detail now on educational status, a topic that receives much attention among the BLS data offerings. The database&#39;s menus in DLXVG3 are being restructured so they follow more closely the logic of the tables in Employment and Earnings. This &quot;maintenance&quot; has achieved much in facilitating the use of this enormous database -- now running toward 12,000 series -- and the work continues. Obviously, if you have suggestions, please offer them at <a href="mailto:data@haver.com">data@haver.com</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602e.jpg" width="353">
Meantime, we can address numerous questions and topics in the relationships of people to the labor market. We picked something at random to illustrate: labor force participation by age and race, with a highlight on older workers. The first graph shows that in recent years, total labor force participation has decreased somewhat: from 67% of the civilian noninstitutional population in the late 1990s to 66% in 2004 and 2005; it stood at 66.1% in
May, according to the latest data, reported this morning.This modest decline masks widely varying trends among age groups. Teen-agers (16-19 years old) participation has plunged, from 52% at the turn of the decade to just 43.5% last month. This rate has stabilized, however, creeping up from a low of 42.8% in March 2004. So a larger proportion of kids is once again starting to want to work. Other parts of EMPL will tell you how many of kids aged 16-24 are in school, whether they&#39;ve graduated high school or are perhaps enrolled in college part-time. If they&#39;re unemployed, the data will tell you if how many are looking for full- or part-time work.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602f.jpg" width="353">
The opposite trend is seen in older workers. For people over age 65, labor force participation is rising; from an average of 12.2% of the population in 1995, the rate reached 15.5% in May. This is also seen in an almost parallel move among white workers in that age group. Other racial and ethnic groups have experienced even larger proportional increases. For blacks and Hispanics, this reflected lower participation in the mid-1990s, just around 10.5%. By now, that for Hispanics is as high as for whites, and blacks are not much below. Since 2000, the BLS has reported separate data for Asian workers. Their participation rates, at 13.7% for the 65 years &amp; older age category, were above the rate for the total labor force in 2000, and while those rates are still relatively high, they also have been more erratic, so it is hard to draw strong conclusions about their labor force status. Nonetheless, an uptrend is clearly identifiable.
Older workers are thus increasingly &quot;economically active&quot;, to apply the phrase used in several European countries. This could be simply because they are healthier than before. It could also be that basic living costs necessitate the earning of wage income. But there is one other policy factor that may be important. In April 2000, Congress and the President enacted a law repealing the earnings ceiling on social security benefits. Previously, a recipient&#39;s benefits were reduced $1 for every $3 they had in earnings above this ceiling, a clear disincentive to work in more than casual employment. Since then, however, there has been no such rule, and upturns in labor force participation can be marked to roughly the time of the law change. The increased participation even included the months of recession in 2001, a time when people usually pull back from job-hunting. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% of Noninstitutional Population</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2000</th>
<th scope="col">1995</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total*</td>
<td>66.1</td>
<td>66.1</td>
<td>66.0</td>
<td>66.0</td>
<td>66.2</td>
<td>67.1</td>
<td>66.6</td>
</tr>
<tr>
<td class="firstcol">Age 16-19*</td>
<td>43.5</td>
<td>43.4</td>
<td>43.7</td>
<td>43.8</td>
<td>44.5</td>
<td>52.0</td>
<td>53.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Age 25-54*</td>
<td>82.8</td>
<td>82.8</td>
<td>82.8</td>
<td>82.8</td>
<td>83.0</td>
<td>84.0</td>
<td>83.5</td>
</tr>
<tr>
<td class="firstcol">Age 65 &amp; Over</td>
<td>15.5</td>
<td>15.4</td>
<td>15.0</td>
<td>14.4</td>
<td>14.0</td>
<td>12.9</td>
<td>12.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; White</td>
<td>15.6</td>
<td>15.5</td>
<td>15.1</td>
<td>14.6</td>
<td>14.1</td>
<td>13.0</td>
<td>12.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Black</td>
<td>14.8</td>
<td>13.1</td>
<td>13.6</td>
<td>13.1</td>
<td>12.9</td>
<td>11.6</td>
<td>10.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Asian</td>
<td>16.3</td>
<td>20.4</td>
<td>15.5</td>
<td>13.1</td>
<td>13.7</td>
<td>13.7</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Hispanic</td>
<td>15.5</td>
<td>15.8</td>
<td>13.9</td>
<td>14.5</td>
<td>12.8</td>
<td>12.2</td>
<td>10.5</td>
</tr>
</tbody>
</table>
</body>
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For the last several months, we have been working to expand and reorganize Haver's EMPL database, which consists of the BLS's massive collection of details on the Household Employment Survey. We've recoded the entire database, [...]

EMPL Database Facilitates Labor Force Analysis; Example: Elderly Workers on the Rise

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602g.jpg" width="353">
Factory inventories rose 0.7% during April after an upwardly revised 0.9% gain during March. The back to back two-month gains were the strongest since early last year. Historical figures in this MSIO report were very much revised.
Machinery inventories rose 0.6% (4.9% y/y) while inventories of computers &amp; electronic products rose 1.2% (6.3% y/y) after a 2.9% March rise. Inventories of electrical equipment rose 0.6% (6.5% y/y) though inventories of furniture &amp; related products fell 0.2% (5.0% y/y) after the 2.1% jump during March. Primary metals inventories rose 1.2% (1.5% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602h.jpg" width="353">
Total factory orders gave back half of the prior month&#39;s jump with a 1.8% decline. Durable goods orders fell 4.4% and that was little revised from the advance report of a 4.8% slide. Factory orders less transportation rose 0.2% (7.9% y/y).
Factory shipments were unchanged following the 1.0% spike in March. Less transportation shipments added 0.6% (6.9% y/y) to the 0.9% March increase. Petroleum shipments rose 3.5% (20.5% y/y). Factory shipments less transportation &amp; petroleum rose 0.3% (5.4% y/y).
Unfilled orders increased another 1.5% due to a 3.7% (74.1% y/y) jump in civilian aircraft. Less the transportation sector altogether backlogs still rose a strong 1.1% (13.7% y/y).<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.7%</td>
<td>0.9%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>6.9%</td>
<td>-7.4%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>-1.8%</td>
<td>4.0%</td>
<td>8.7%</td>
<td>8.5%</td>
<td>7.5%</td>
<td>0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.0%</td>
<td>1.0%</td>
<td>6.0%</td>
<td>7.1%</td>
<td>6.8%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>1.5%</td>
<td>3.0%</td>
<td>22.8%</td>
<td>16.3%</td>
<td>4.5%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
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Factory inventories rose 0.7% during April after an upwardly revised 0.9% gain during March. The back to back two-month gains were the strongest since early last year. Historical figures in this MSIO report were very much revised. [...]

U.S. Factory Inventory Accumulation Regained Momentum

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602b.jpg" width="353">
US light vehicle sales during May fell 3.9% m/m to 16.10M units according to the Autodata Corporation. The decline exceeded Consensus expectations for sales of 16.5M units and was to the lowest level since last November.
Overall light truck sales fell 4.9% (-9.6% y/y) last month. Sales of imported light trucks gave back some of the indication of holding up perhaps apparent in April and fell 10.6% m/m (+6.1% y/y). For the fourth month this year, sales of domestic trucks fell sharply. A 3.8% (-11.9% y/y) decline dropped sales to the lowest level since a very weak November. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602a.jpg" width="353">
Some relief from the pressure on sales of relatively fuel in-efficient trucks may have been apparent in the modest three cent decline in retail gasoline prices last week to $2.87 per gallon.
Auto sales during May slipped 2.7% (+3.9% y/y) led by a 5.4% (-2.9% y/y) fall in domestic car sales. Sales of imported autos rose 2.9% (20.1% y/y).
Imports&#39; share of the US light vehicle market surged to another record level of 24.4% versus 20.4% during all of last year.

<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/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.10</td>
<td>16.74</td>
<td>-3.5%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.79</td>
<td>8.00</td>
<td>3.9%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.31</td>
<td>8.74</td>
<td>-9.6%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
</tr>
</tbody>
</table>
</body>
</html>

US light vehicle sales during May fell 3.9% m/m to 16.10M units according to the Autodata Corporation. The decline exceeded Consensus expectations for sales of 16.5M units and was to the lowest level since last November. Overall light [...]

U.S. Vehicle Sales Down, Light Truck Sales Down Hard

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602c.jpg" width="353">
Nonfarm payrolls rose a modest 75,000 during May, the weakest increase since last October. Moreover, job gains during the prior two months were revised down by a cumulative 37,000 while the May gain fell short of Consensus expectations for a 175,000 rise.
Despite the weak jobs figures from the establishment survey, the household survey indicated a drop in the unemployment rate to 4.6% which compared to Consensus expectations for m/m stability at 4.7%. Employment rose 288,000 (1.7% y/y) and the labor force rose 180,000 (1.2% y/y). 
Private sector payrolls grew 67,000 (1.6% y/y) during May while government employment rose 8,000 (0.7% y/y).
Private service-producing jobs rose 77,000 (1.6% y/y) last months after a downwardly revised 72,000 rise in April. For the twelve months ending March, these jobs were rising an average 131,000 per month. May jobs in retail trade fell 27,100 (-0.1% y/y) again reflecting broad based sector declines. Financial sector jobs rose 12,000 (2.7% y/y) and professional &amp; business services employment rose 27,000 (2.7% y/y). Temporary help services jobs fell by 2,800 (+3.7% y/y), the fourth m/m decline this year. Jobs in education &amp; health rose a firm 41,000 (2.4% y/y) but leisure &amp; hospitality jobs increased just 4,000 (1.7% y/y).
Factory sector payrolls fell 14,000 after an unrevised 19,000 April increase. Employment in the motor vehicles &amp; parts industries fell 9,700 (-1.7% y/y) and computer &amp; electronics payrolls reversed all of the prior month&#39;s gain with a 4,6000 (+0.3% y/y) worker decline.
Construction employment increased just 1,000 (3.5% y/y) following monthly gains that averaged 22,000 during the prior year. 
Growth in average hourly earnings moderated to 0.1% from an upwardly revised 0.6% rise during April. The slowdown exceeded Consensus expectations for a 0.3% increase. Private service-producing wages rose just 0.1% (4.2% y/y) following a 0.7% increase in April. Professional &amp; business services wages were unchanged (5.7% y/y) after a 1.1% April jump while finance, insurance &amp; real estate earnings fell 0.1% (4.6% y/y). Factory sector earnings were unchanged (1.6% y/y) after an upwardly revised 0.4% April gain.

<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</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>75,000</td>
<td>126,000</td>
<td>1.4%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-14,000</td>
<td>19,000</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.9</td>
<td>33.7 (May &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.6%</td>
<td>3.7%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.6%</td>
<td>4.7%</td>
<td>5.1% (May &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Nonfarm payrolls rose a modest 75,000 during May, the weakest increase since last October. Moreover, job gains during the prior two months were revised down by a cumulative 37,000 while the May gain fell short of Consensus [...]

U.S. Employment & Wage Growth Slowed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602c.jpg" width="353">
Nonfarm payrolls rose a modest 75,000 during May, the weakest increase since last October. Moreover, job gains during the prior two months were revised down by a cumulative 37,000 while the May gain fell short of Consensus expectations for a 175,000 rise.
Despite the weak jobs figures from the establishment survey, the household survey indicated a drop in the unemployment rate to 4.6% which compared to Consensus expectations for m/m stability at 4.7%. Employment rose 288,000 (1.7% y/y) and the labor force rose 180,000 (1.2% y/y). 
Private sector payrolls grew 67,000 (1.6% y/y) during May while government employment rose 8,000 (0.7% y/y).
Private service-producing jobs rose 77,000 (1.6% y/y) last months after a downwardly revised 72,000 rise in April. For the twelve months ending March, these jobs were rising an average 131,000 per month. May jobs in retail trade fell 27,100 (-0.1% y/y) again reflecting broad based sector declines. Financial sector jobs rose 12,000 (2.7% y/y) and professional &amp; business services employment rose 27,000 (2.7% y/y). Temporary help services jobs fell by 2,800 (+3.7% y/y), the fourth m/m decline this year. Jobs in education &amp; health rose a firm 41,000 (2.4% y/y) but leisure &amp; hospitality jobs increased just 4,000 (1.7% y/y).
Factory sector payrolls fell 14,000 after an unrevised 19,000 April increase. Employment in the motor vehicles &amp; parts industries fell 9,700 (-1.7% y/y) and computer &amp; electronics payrolls reversed all of the prior month&#39;s gain with a 4,6000 (+0.3% y/y) worker decline.
Construction employment increased just 1,000 (3.5% y/y) following monthly gains that averaged 22,000 during the prior year. 
Growth in average hourly earnings moderated to 0.1% from an upwardly revised 0.6% rise during April. The slowdown exceeded Consensus expectations for a 0.3% increase. Private service-producing wages rose just 0.1% (4.2% y/y) following a 0.7% increase in April. Professional &amp; business services wages were unchanged (5.7% y/y) after a 1.1% April jump while finance, insurance &amp; real estate earnings fell 0.1% (4.6% y/y). Factory sector earnings were unchanged (1.6% y/y) after an upwardly revised 0.4% April gain.

<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</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>75,000</td>
<td>126,000</td>
<td>1.4%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-14,000</td>
<td>19,000</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.9</td>
<td>33.7 (May &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.6%</td>
<td>3.7%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.6%</td>
<td>4.7%</td>
<td>5.1% (May &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
U.S. Vehicle Sales Down, Light Truck Sales Down Hard 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602b.jpg" width="353">
US light vehicle sales during May fell 3.9% m/m to 16.10M units according to the Autodata Corporation. The decline exceeded Consensus expectations for sales of 16.5M units and was to the lowest level since last November.
Overall light truck sales fell 4.9% (-9.6% y/y) last month. Sales of imported light trucks gave back some of the indication of holding up perhaps apparent in April and fell 10.6% m/m (+6.1% y/y). For the fourth month this year, sales of domestic trucks fell sharply. A 3.8% (-11.9% y/y) decline dropped sales to the lowest level since a very weak November. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602a.jpg" width="353">
Some relief from the pressure on sales of relatively fuel in-efficient trucks may have been apparent in the modest three cent decline in retail gasoline prices last week to $2.87 per gallon.
Auto sales during May slipped 2.7% (+3.9% y/y) led by a 5.4% (-2.9% y/y) fall in domestic car sales. Sales of imported autos rose 2.9% (20.1% y/y).
Imports&#39; share of the US light vehicle market surged to another record level of 24.4% versus 20.4% during all of last year.

<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/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.10</td>
<td>16.74</td>
<td>-3.5%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.79</td>
<td>8.00</td>
<td>3.9%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.31</td>
<td>8.74</td>
<td>-9.6%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
</tr>
</tbody>
</table>
U.S. Factory Inventory Accumulation Regained Momentum 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602g.jpg" width="353">
Factory inventories rose 0.7% during April after an upwardly revised 0.9% gain during March. The back to back two-month gains were the strongest since early last year. Historical figures in this MSIO report were very much revised.
Machinery inventories rose 0.6% (4.9% y/y) while inventories of computers &amp; electronic products rose 1.2% (6.3% y/y) after a 2.9% March rise. Inventories of electrical equipment rose 0.6% (6.5% y/y) though inventories of furniture &amp; related products fell 0.2% (5.0% y/y) after the 2.1% jump during March. Primary metals inventories rose 1.2% (1.5% y/y).
Total factory orders gave back half of the prior month&#39;s jump with a 1.8% decline. Durable goods orders fell 4.4% and that was little revised from the advance report of a 4.8% slide. Factory orders less transportation rose 0.2% (7.9% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602h.jpg" width="353">
Factory shipments were unchanged following the 1.0% spike in March. Less transportation shipments added 0.6% (6.9% y/y) to the 0.9% March increase. Petroleum shipments rose 3.5% (20.5% y/y). Factory shipments less transportation &amp; petroleum rose 0.3% (5.4% y/y).
Unfilled orders increased another 1.5% due to a 3.7% (74.1% y/y) jump in civilian aircraft. Less the transportation sector altogether backlogs still rose a strong 1.1% (13.7% y/y).<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.7%</td>
<td>0.9%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>6.9%</td>
<td>-7.4%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>-1.8%</td>
<td>4.0%</td>
<td>8.7%</td>
<td>8.5%</td>
<td>7.5%</td>
<td>0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.0%</td>
<td>1.0%</td>
<td>6.0%</td>
<td>7.1%</td>
<td>6.8%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>1.5%</td>
<td>3.0%</td>
<td>22.8%</td>
<td>16.3%</td>
<td>4.5%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
EMPL Database Facilitates Labor Force Analysis; Example: Elderly Workers on the Rise 
by <a href="/comment/Stone.html">Carol Stone</a> June 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602d.jpg" width="353">
For the last several months, we have been working to expand and reorganize Haver&#39;s EMPL database, which consists of the BLS&#39;s massive collection of details on the Household Employment Survey. We&#39;ve recoded the entire database, hopefully making the codes simpler, more intuitive and less like serial numbers. We&#39;ve added about 1,700 new series, including more detail on employment of various resident Hispanic groups, such as Puerto Ricans. There is also greater detail now on educational status, a topic that receives much attention among the BLS data offerings. The database&#39;s menus in DLXVG3 are being restructured so they follow more closely the logic of the tables in Employment and Earnings. This &quot;maintenance&quot; has achieved much in facilitating the use of this enormous database -- now running toward 12,000 series -- and the work continues. Obviously, if you have suggestions, please offer them at <a href="mailto:data@haver.com">data@haver.com</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602e.jpg" width="353">
Meantime, we can address numerous questions and topics in the relationships of people to the labor market. We picked something at random to illustrate: labor force participation by age and race, with a highlight on older workers. The first graph shows that in recent years, total labor force participation has decreased somewhat: from 67% of the civilian noninstitutional population in the late 1990s to 66% in 2004 and 2005; it stood at 66.1% in
May, according to the latest data, reported this morning.This modest decline masks widely varying trends among age groups. Teen-agers (16-19 years old) participation has plunged, from 52% at the turn of the decade to just 43.5% last month. This rate has stabilized, however, creeping up from a low of 42.8% in March 2004. So a larger proportion of kids is once again starting to want to work. Other parts of EMPL will tell you how many of kids aged 16-24 are in school, whether they&#39;ve graduated high school or are perhaps enrolled in college part-time. If they&#39;re unemployed, the data will tell you if how many are looking for full- or part-time work.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602f.jpg" width="353">
The opposite trend is seen in older workers. For people over age 65, labor force participation is rising; from an average of 12.2% of the population in 1995, the rate reached 15.5% in May. This is also seen in an almost parallel move among white workers in that age group. Other racial and ethnic groups have experienced even larger proportional increases. For blacks and Hispanics, this reflected lower participation in the mid-1990s, just around 10.5%. By now, that for Hispanics is as high as for whites, and blacks are not much below. Since 2000, the BLS has reported separate data for Asian workers. Their participation rates, at 13.7% for the 65 years &amp; older age category, were above the rate for the total labor force in 2000, and while those rates are still relatively high, they also have been more erratic, so it is hard to draw strong conclusions about their labor force status. Nonetheless, an uptrend is clearly identifiable.
Older workers are thus increasingly &quot;economically active&quot;, to apply the phrase used in several European countries. This could be simply because they are healthier than before. It could also be that basic living costs necessitate the earning of wage income. But there is one other policy factor that may be important. In April 2000, Congress and the President enacted a law repealing the earnings ceiling on social security benefits. Previously, a recipient&#39;s benefits were reduced $1 for every $3 they had in earnings above this ceiling, a clear disincentive to work in more than casual employment. Since then, however, there has been no such rule, and upturns in labor force participation can be marked to roughly the time of the law change. The increased participation even included the months of recession in 2001, a time when people usually pull back from job-hunting. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% of Noninstitutional Population</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2000</th>
<th scope="col">1995</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total*</td>
<td>66.1</td>
<td>66.1</td>
<td>66.0</td>
<td>66.0</td>
<td>66.2</td>
<td>67.1</td>
<td>66.6</td>
</tr>
<tr>
<td class="firstcol">Age 16-19*</td>
<td>43.5</td>
<td>43.4</td>
<td>43.7</td>
<td>43.8</td>
<td>44.5</td>
<td>52.0</td>
<td>53.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Age 25-54*</td>
<td>82.8</td>
<td>82.8</td>
<td>82.8</td>
<td>82.8</td>
<td>83.0</td>
<td>84.0</td>
<td>83.5</td>
</tr>
<tr>
<td class="firstcol">Age 65 &amp; Over</td>
<td>15.5</td>
<td>15.4</td>
<td>15.0</td>
<td>14.4</td>
<td>14.0</td>
<td>12.9</td>
<td>12.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; White</td>
<td>15.6</td>
<td>15.5</td>
<td>15.1</td>
<td>14.6</td>
<td>14.1</td>
<td>13.0</td>
<td>12.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Black</td>
<td>14.8</td>
<td>13.1</td>
<td>13.6</td>
<td>13.1</td>
<td>12.9</td>
<td>11.6</td>
<td>10.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Asian</td>
<td>16.3</td>
<td>20.4</td>
<td>15.5</td>
<td>13.1</td>
<td>13.7</td>
<td>13.7</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Hispanic</td>
<td>15.5</td>
<td>15.8</td>
<td>13.9</td>
<td>14.5</td>
<td>12.8</td>
<td>12.2</td>
<td>10.5</td>
</tr>
</tbody>
</table>
</body>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060601f.jpg" width="353">
The PMI is a simple survey, asking procurement officers of companies how major measures of their business have behaved in the latest month. Did production go up or down? Did orders go up or down? Did they add employees or reduce their number? and so on. The results are stated as the number of firms reporting an increase plus half the number reporting no change; anything above 50% indicates an economic expansion. These surveys, coordinated mainly by NTC Economics in London, are becoming available in more and more countries; the table below includes a cross-section from several regions of the world.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060601g.jpg" width="353">
May&#39;s results for manufacturers, reported on June 1 for nearly all participating countries, generally show a moderately widespread expansion. The margin narrowed in the US, as Tom Moeller highlights here in a separate article, but the indexes were steady or higher in the Euro-Zone, China and South Africa. Among the countries we perused, only Australia showed any notable weakness, falling to 48.93 from 50.27 in April, but this is less severe than it was last autumn. Japan looks to be moving through a slower growth period after peaking in January, but so far the moderation is less than 2 index points.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060601h.jpg" width="353">
The European performance is striking. The overall index and the output component both reached their highest levels since August 2000. New orders were off slightly in May, but are hovering in a high range. Even employment has been ratcheting upward since the spring of 2003; this last is a relative movement. Only since December has the employment index been at or above 50%, so until that time &quot;improvement&quot; meant that progressively fewer companies were reporting contractions in the number of workers. Even so, we&#39;ve so often thought of Europe in the doldrums and these data suggest that&#39;s not the case.
In fact, we&#39;re fairly impressed with these manufacturing industry performances. Unfortunately, the data for the non-US countries don&#39;t have much history, so we can&#39;t see how they relate to entire business cycles. However, the Euro-Zone combined index, which began in June 1997, has a remarkable 88% correlation with the year-to-year growth in manufacturing production in the Euro-Zone, with a lead of two months. This suggests more strength to come in Euro-Zone production data. In the face of rising prices of energy, commodities and other inputs, this suggests perhaps more resilience than we&#39;d have envisioned for the European producers.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">PMI Diffusion Indexes</th>
<th scope="col">May 2006</th>
<th scope="col">April 2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone</td>
<td>57.02</td>
<td>56.73</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Germany</td>
<td>58.53</td>
<td>58.11</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; France</td>
<td>56.14</td>
<td>55.31</td>
</tr>
<tr>
<td class="firstcol">Japan</td>
<td>55.31</td>
<td>55.52</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>52.83</td>
<td>52.72</td>
</tr>
<tr>
<td class="firstcol">Australia</td>
<td>48.93</td>
<td>50.27</td>
</tr>
<tr class="odd">
<td class="firstcol">South Africa</td>
<td>57.6</td>
<td>54.3</td>
</tr>
<tr>
<td class="firstcol">Memo: US</td>
<td>54.4</td>
<td>57.3</td>
</tr>
</tbody>
</table>
</body>
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The PMI is a simple survey, asking procurement officers of companies how major measures of their business have behaved in the latest month. Did production go up or down? Did orders go up or down? Did they add employees or reduce their [...]

PMI Surveys Show Good Manufacturing Growth in Many Countries

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060601m.jpg" width="353">
The Challenger, Grey &amp; Christmas survey indicated that announced job cuts fell another 10.0% last month and have now fallen in each month of 2006. The decline was to the lowest level since late 2000.
During the last ten years there has been an 83% (inverse) correlation between the three month moving average level of announced job cuts and the three month change payroll employment.
Layoffs fell in transportation (-58.3% y/y) and energy (-97.0% y/y) as did job cuts in electronics (-89.0 y/y), industrial goods (-13.4% y/y), insurance (-61.2% y/y), media (+15.9% y/y) and real estate (-75.0% y/y).
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported a sharp m/m drop in announced hiring plans (-34.1% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>53,716</td>
<td>59,688</td>
<td>-34.7%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
</table>
</body>
</html>

The Challenger, Grey & Christmas survey indicated that announced job cuts fell another 10.0% last month and have now fallen in each month of 2006. The decline was to the lowest level since late 2000. During the last ten years there [...]

Challenger Layoffs Fell Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060601k.jpg" width="353">
Home prices as measured by the Office of Federal Housing Enterprise Oversight (OFHEO) rose another 2.0% last quarter. The increase was the slowest after rising between 2.5% and 4.5% each quarter for two years.
The OFHEO house price index is a geometric weighted average based on more than 26.5 million repeat transactions (purchase or refinance) over 29 years and 12,000 transactions annually.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060601i.jpg" width="353">
Year to year, the 12.5% gain in prices nationwide was the slowest since late 2004.
The purchase only home price index rose 1.8% (10.1% y/y), also its slowest gain in nearly three years after quarterly gains which ranged between 2.1% and 2.9%.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060601j.jpg" width="353">
Slower growth in home prices ranged across the country but was pronounced in Massachusetts where prices rose just 0.5% (6.5% y/y). That y/y gain is down from a peak of 14.4% in 2000 and 10.1% last year. Prices also inched up just 0.2% (2.9% y/y) in Michigan, the slowest y/y gain since 1993. In South Dakota, home prices fell 0.1% (+6.1% y/y).
In New York, house prices rose 1.9% (12.4% y/y) and in California prices rose 2.5% (19.2% y/y), a slowdown from the 28.0% y/y gain in late 2004.
House price appreciation continued strong in Florida as evidenced by a 4.3% (26.6% y/y) gain. Last year prices in Florida rose 25.9% and in 2004 were up 17.0%.
View the latest OFHEO release <a href="http://www.ofheo.gov/media/pdf/1q06hpi.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E911/@E91101/@E91101.HTM">OFHEO</a></th>
<th scope="col">1Q06</th>
<th scope="col">4Q05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">House Price Index</td>
<td>2.0%</td>
<td>3.1%</td>
<td>12.5%</td>
<td>13.3%</td>
<td>10.8%</td>
<td>6.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Home prices as measured by the Office of Federal Housing Enterprise Oversight (OFHEO) rose another 2.0% last quarter. The increase was the slowest after rising between 2.5% and 4.5% each quarter for two years. The OFHEO house price [...]

Home Prices Rose More Slowly

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.

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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.

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**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.

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**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.

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**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.

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**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.

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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

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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.

U.S. Trade Deficit Deepens to Record in March

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

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

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

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

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

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

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

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

U.S. Energy Prices Remain Mixed in Latest Week

Robert Brusca

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

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

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

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

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

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

Economy in Brief

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