Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503b.jpg" width="353">
US light vehicle sales rose a slight 0.9% during April to 16.74M units according to the Autodata Corporation. The sales level matched Consensus expectations.
The rough month-to-month stability of the total, however, masked divergent underlying patterns. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503c.jpg" width="353">
Perhaps reflecting the effects of higher fuel costs, sales of domestic trucks fell a sharp 6.6% (-9.3% y/y) and that decline pulled overall light truck sales down 4.8% (-6.1% y/y) last month. Sales of the relatively fuel efficient imported light trucks, in contrast, rose 5.6% (15.0% y/y).
Auto sales during April rose 7.8% (0.8% y/y) led by an 11.3% jump in imported car sales (12.3% y/y) to 2.58M units, the highest level since early 1990. Sales of domestic autos also improved 6.3% (-3.8% y/y).<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503a.jpg" width="353">
Imports&#39; share of the US light vehicle market surged to another record level, at 23.8%. For the first four months of 2006 imports&#39; share averaged 21.2% versus 20.3% during all of last year.
Inventories of domestically made autos fell 10.2% y/y through February while truck inventories, domestics &amp; imports, through March were off 2.7% y/y.
Production of autos was up 14.5% through March though the GDP estimate of total real motor vehicle output through 1Q was down 2.5% y/y.
The U.S. auto supplier industry in transition from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2006_226.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/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></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">Total</td>
<td>16.74</td>
<td>16.59</td>
<td>-2.9%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>8.00</td>
<td>7.42</td>
<td>0.8%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.74</td>
<td>9.17</td>
<td>-6.1%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
</tr>
</tbody>
</table>
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US light vehicle sales rose a slight 0.9% during April to 16.74M units according to the Autodata Corporation. The sales level matched Consensus expectations. The rough month-to-month stability of the total, however, masked divergent [...]

U.S. Auto Sales Up, Light Truck Sales Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503b.jpg" width="353">
US light vehicle sales rose a slight 0.9% during April to 16.74M units according to the Autodata Corporation. The sales level matched Consensus expectations.
The rough month-to-month stability of the total, however, masked divergent underlying patterns. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503c.jpg" width="353">
Perhaps reflecting the effects of higher fuel costs, sales of domestic trucks fell a sharp 6.6% (-9.3% y/y) and that decline pulled overall light truck sales down 4.8% (-6.1% y/y) last month. Sales of the relatively fuel efficient imported light trucks, in contrast, rose 5.6% (15.0% y/y).
Auto sales during April rose 7.8% (0.8% y/y) led by an 11.3% jump in imported car sales (12.3% y/y) to 2.58M units, the highest level since early 1990. Sales of domestic autos also improved 6.3% (-3.8% y/y).<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503a.jpg" width="353">
Imports&#39; share of the US light vehicle market surged to another record level, at 23.8%. For the first four months of 2006 imports&#39; share averaged 21.2% versus 20.3% during all of last year.
Inventories of domestically made autos fell 10.2% y/y through February while truck inventories, domestics &amp; imports, through March were off 2.7% y/y.
Production of autos was up 14.5% through March though the GDP estimate of total real motor vehicle output through 1Q was down 2.5% y/y.
The U.S. auto supplier industry in transition from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2006_226.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/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></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">Total</td>
<td>16.74</td>
<td>16.59</td>
<td>-2.9%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>8.00</td>
<td>7.42</td>
<td>0.8%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.74</td>
<td>9.17</td>
<td>-6.1%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
</tr>
</tbody>
</table>
ISM Nonmanufacturing Index Up Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503d.jpg" width="353">
In April, the Business Activity Index for the non-manufacturing sector rose a convincing two and one half points to the highest level since August, reported the Institute for Supply Management (ISM). The rise to 63.0 by far outpaced Consensus expectations for a decline to 59.5.
Since the series&#39; inception in 1997 there has been a 50% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
The new orders index jumped five points to 64.6, the highest level since 2004 while the employment index recouped about half of the prior month&#39;s decline with a rise to 56.5 and was up from the 2005 average of 55.9. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Pricing power recovered all of the March decline and rose ten points to the highest level since November. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">April &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>63.0</td>
<td>60.5</td>
<td>60.4</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.5</td>
<td>60.5</td>
<td>64.1</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>
U.S. Factory Inventories Accumulate 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503f.jpg" width="353">
Factory inventories rose 0.7% during March and more than made up for an unrevised 0.4% drop the prior month.
Much of the prior month&#39;s inventory decline had been due to lower computers &amp; electronic products which fully recovered with a 2.9% (4.1% y/y) rise. Machinery inventories also were down in February and then rose in March by 1.0% (6.0% y/y) while a 0.2% decline in electrical equipment inventories (6.1% y/y) also fully reversed.
Continuing with earlier accumulation, inventories of furniture &amp; related products jumped 1.9% (5.5% y/y) while primary metals inventories added 0.2% (0.5% y/y) to the very strong accumulation of January &amp; February.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503e.jpg" width="353">
Total factory orders jumped 4.2% due to a 6.5% surge in durable goods orders, revised up from the advance report of a 6.1% surge. That was goosed by orders for nondefense aircraft &amp; parts which rose 71.3% (329.9% y/y). Factory orders less the transportation sector altogether rose 2.2% (6.8% y/y) and reversed all of the prior month&#39;s decline.
Factory shipments rose 0.8% and reversed most of a February drop while less transportation shipments gained back half of the February drop with a 0.8% increase (6.0% y/y). Petroleum shipments rose 7.8% (7.3% y/y). Factory shipments less transportation &amp; petroleum ticked up 0.1% (5.9% y/y).
Unfilled orders ballooned 2.9% due to the strength of aircraft orders. Nevertheless, less the transportation sector altogether backlogs rose 1.5% (11.1% 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">Mar</th>
<th scope="col">Feb</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>-0.4%</td>
<td>3.4%</td>
<td>4.4%</td>
<td>7.7%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>4.2%</td>
<td>0.4%</td>
<td>11.6%</td>
<td>8.5%</td>
<td>9.3%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.8%</td>
<td>-1.2%</td>
<td>6.1%</td>
<td>7.4%</td>
<td>9.5%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>2.9%</td>
<td>1.1%</td>
<td>21.1%</td>
<td>16.5%</td>
<td>8.4%</td>
<td>8.0%</td>
</tr>
</tbody>
</table>
ADP National Employment Report & U.S. Payrolls 
by <a href="/comment/Moeller.html">Carol Stone and Tom Moeller</a> May 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503g.jpg" width="353">
Today, ADP, the well-known payroll processors for many employers, published an estimate of the upcoming nonfarm payroll data for April, pointing to an increase in private sector employment of 178,000 for the month (1.9% y/y). They have compiled this from their substantial database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator meant to project the BLS&#39;s official number. This 178,000 gain would follow March&#39;s 133,000 rise. 
These data are called the &quot;ADP National Employment Report&quot;. The series will be maintained in Haver&#39;s USECON database; historical data go back to December 2000. Importantly, the figures in this report cover only private sector jobs and exclude employment in the public sector, which grew an average of 13,000 per month over the last year. The monthly change also obviously varies, and indeed ranged from a decline of 34,000 to an increase of 35,000. This would be a significant difference between the ADP number and total nonfarm payrolls. Some analysts indicated that ADP&#39;s April estimate of 178,000 in private sector jobs would correspond to a gain in total payrolls of 200,000.
Unlike other indicators of the US labor market, such as unemployment insurance claims, the ADP measure is directly comparable to the kind of data in the official BLS report. Automatic Data Processing, Inc. is the nation&#39;s leading provider of payroll-related services. Their figure is based on information about 24,000,000 jobholders; this is distilled to cover the numbers actually on payrolls during the BLS survey week, about 14,000,000. The report will be issued at 8:15AM on the Wednesday prior to each employment release. 
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90. The estimator is shown by the firms&#39; analysis to outperform current &quot;consensus&quot; forecasts and models based on claims data. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/ADP_NER_Report_April.pdf">here</a>, and their methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></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>
<td class="firstcol">Nonfarm Private Payroll Employment (Chg.)</td>
<td>178,000</td>
<td>133,000</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>-0.4%</td>
</tr>
</tbody>
</table>


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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502e.jpg" width="353">
The British Bankers&#39; Association released figures on mortgage and consumer credit lending today. Outstanding mortgages were up 0.12% from February and 3.54% above March 2005. Consumer credit outstanding, on the contrary, declined 1.82% from February and was 7.18% below March, 2005.
The year-to-year changes in outstanding mortgage and consumer credit have been declining since mid-2004. The deceleration in mortgages has been modest compared to that in consumer credit as can be seen in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502f.jpg" width="353">
The decline in credit card debt is reflected in the decline over the past year or so in retail sales of household goods. The second chart shows the year-to-year change in retail sales of household goods and the net increase in consumer credit outstandings. Both series are seasonally unadjusted.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502g.jpg" width="353">
Banks have been playing a smaller proportional role in mortgage lending as Other Specialist Lenders (Non-bank UK credit grantors and specialist mortgage lenders) have taken a larger share of the market. Banks&#39; share in the market has gone from 72.0% in 2000 to 59.4% in 2005, while that of Other Specialist Lenders has risen from 7.7% to 22.3%. The share of Building Societies has declined moderately from 20.0% to 17.9%. The share of other lenders has been insignificant. The year-to-year changes in outstanding mortgages at Banks and at Other Specialist lenders are shown in the third chart. While the yearly increases in Other Specialist Lenders have been declining they are still increasing at rates of almost 30% compared to about 5% for Banks.

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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/@U1/@U106/@U106.HTM">United Kingdom</a></th>
<th scope="col">Mar 06</th>
<th scope="col">Feb 06</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">BBA Consumer Credit Outstanding (Bil. GBP)</td>
<td>31.2</td>
<td>31.8</td>
<td>33.6</td>
<td>-1.82</td>
<td>-7.18</td>
<td>33.4</td>
<td>34.0</td>
<td>28.7</td>
</tr>
<tr>
<td class="firstcol">BBA Mortgages Outstanding (Bil.GBP)</td>
<td>513.6</td>
<td>513.0</td>
<td>496.1</td>
<td>0.12</td>
<td>3.54</td>
<td>521.1</td>
<td>496.4</td>
<td>468.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;Mortgage Lending by: %</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
<td>2001</td>
<td> 2000 </td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Banks</td>
<td>59.4</td>
<td>61.8</td>
<td>65.9</td>
<td>69.1</td>
<td>41.0</td>
<td>72.0</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Building Societies</td>
<td>&nbsp;17.9</td>
<td>18.2&nbsp;</td>
<td>18.4</td>
<td>18.3&nbsp;</td>
<td>&nbsp;19.2</td>
<td>&nbsp;20.0</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Other Specialist Lenders</td>
<td>22.3</td>
<td>19.6</td>
<td>15.4</td>
<td>12.1</td>
<td>9.7</td>
<td>7.7</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Other Lenders</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
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The British Bankers' Association released figures on mortgage and consumer credit lending today. Outstanding mortgages were up 0.12% from February and 3.54% above March 2005. Consumer credit outstanding, on the contrary, declined [...]

UK Mortgage Lending Up but Consumer Credit Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502d.jpg" width="353">
Announced job cuts fell another 8.1% last month on top of the 25.7% m/m decline during March, according to the Challenger, Grey &amp; Christmas survey. The decline was to the lowest level since last April.
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 in the apparel industry dropped sharply (-52.2% y/y) as did job cuts in financial (-37.8 y/y, industrial goods (-5.5% y/y), pharmaceutical (-67.3% y/y) and retail (-82.6% y/y). Announced job cuts in electronics (-74.0% y/y) and automotive industries (139.2% y/y) rose m/m.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported a sharp m/m increase in announced hiring plans (81.7% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<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">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>
<td class="firstcol">Announced Job Cuts</td>
<td>59,688</td>
<td>64,975</td>
<td>3.2%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
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Announced job cuts fell another 8.1% last month on top of the 25.7% m/m decline during March, according to the Challenger, Grey & Christmas survey. The decline was to the lowest level since last April. During the last ten years there [...]

Challenger Layoffs Lower Still

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502c.jpg" width="353">
Retail gasoline prices rose less than one penny last week to $2.92 per gallon (30.6% y/y). The near-stability followed four consecutive weeks of increase which ranged between nine and thirteen cents per week.
Earlier signs of relief from the recent upward pressure on prices reversed a bit yesterday as the spot market price for regular unleaded rose a nickel. Nevertheless, the latest spot price at $2.17 per gallon was down from the high of $2.35 during mid-April.
The price of West Texas Intermediate crude oil also move up yesterday to $73.71 per barrel, twelve cents short of the record high.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502b.jpg" width="353">
The jump in gasoline prices has been accompanied by a sharp slowdown in gasoline demand. Through the latest four weeks, demand versus the year ago level went negative by 0.5%, the first negative y/y comparison since last Autumn when gas prices were similarly elevated.
The latest Short-Term Energy and Summer Fuels Outlook from the U.S. Energy Information Administration can be found <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html"> 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/WEEKLY/@W4/@W403/@W40303/@W40303.HTM">US Weekly</a></th>
<th scope="col">05/01/06</th>
<th scope="col">04/24/06</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">U.S. Retail Gasoline, Regular per Gal.</td>
<td>$2.92</td>
<td>$2.91</td>
<td>30.6%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail gasoline prices rose less than one penny last week to $2.92 per gallon (30.6% y/y). The near-stability followed four consecutive weeks of increase which ranged between nine and thirteen cents per week. Earlier signs of relief [...]

Gasoline Prices Stable Last Week, But ...

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502a.jpg" width="353">
Chain store sales jumped another 0.7% last week and more than recouped the prior period&#39;s 0.2% decline, according to the International Council of Shopping Centers (ICSC)-UBS survey.
The late-month recovery lifted April chain store sales 1.6% above the March average which rose 0.7% from February. The April gain was the largest in over two years and during the first four months of 2006, chain store sales rose at a 14% annual rate.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The chain store sales leading indicator fell 0.6% during the latest week (-1.4% y/y) marking the third decline in the last four periods. In April, the leading indicator is down 0.7% from the March average which rose 0.3% from February.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
Cross-Country Personal Saving Rates from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060501/cover.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">04/29/06</th>
<th scope="col">04/22/06</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">Total Weekly Chain Store Sales</td>
<td>477.7</td>
<td>474.6</td>
<td>4.3%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


</html>

Chain store sales jumped another 0.7% last week and more than recouped the prior period's 0.2% decline, according to the International Council of Shopping Centers (ICSC)-UBS survey. The late-month recovery lifted April chain store [...]

When Shoppers Shop ...

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502a.jpg" width="353">
Chain store sales jumped another 0.7% last week and more than recouped the prior period&#39;s 0.2% decline, according to the International Council of Shopping Centers (ICSC)-UBS survey.
The late-month recovery lifted April chain store sales 1.6% above the March average which rose 0.7% from February. The April gain was the largest in over two years and during the first four months of 2006, chain store sales rose at a 14% annual rate.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The chain store sales leading indicator fell 0.6% during the latest week (-1.4% y/y) marking the third decline in the last four periods. In April, the leading indicator is down 0.7% from the March average which rose 0.3% from February.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
Cross-Country Personal Saving Rates from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060501/cover.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">04/29/06</th>
<th scope="col">04/22/06</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">Total Weekly Chain Store Sales</td>
<td>477.7</td>
<td>474.6</td>
<td>4.3%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Gasoline Prices Stable Last Week, But ... 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502c.jpg" width="353">
Retail gasoline prices rose less than one penny last week to $2.92 per gallon (30.6% y/y). The near-stability followed four consecutive weeks of increase which ranged between nine and thirteen cents per week.
Earlier signs of relief from the recent upward pressure on prices reversed a bit yesterday as the spot market price for regular unleaded rose a nickel. Nevertheless, the latest spot price at $2.17 per gallon was down from the high of $2.35 during mid-April.
The price of West Texas Intermediate crude oil also move up yesterday to $73.71 per barrel, twelve cents short of the record high.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502b.jpg" width="353">
The jump in gasoline prices has been accompanied by a sharp slowdown in gasoline demand. Through the latest four weeks, demand versus the year ago level went negative by 0.5%, the first negative y/y comparison since last Autumn when gas prices were similarly elevated.
The latest Short-Term Energy and Summer Fuels Outlook from the U.S. Energy Information Administration can be found <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html"> 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/WEEKLY/@W4/@W403/@W40303/@W40303.HTM">US Weekly</a></th>
<th scope="col">05/01/06</th>
<th scope="col">04/24/06</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">U.S. Retail Gasoline, Regular per Gal.</td>
<td>$2.92</td>
<td>$2.91</td>
<td>30.6%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
</tbody>
</table>
Challenger Layoffs Lower Still 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502d.jpg" width="353">
Announced job cuts fell another 8.1% last month on top of the 25.7% m/m decline during March, according to the Challenger, Grey &amp; Christmas survey. The decline was to the lowest level since last April.
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 in the apparel industry dropped sharply (-52.2% y/y) as did job cuts in financial (-37.8 y/y, industrial goods (-5.5% y/y), pharmaceutical (-67.3% y/y) and retail (-82.6% y/y). Announced job cuts in electronics (-74.0% y/y) and automotive industries (139.2% y/y) rose m/m.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported a sharp m/m increase in announced hiring plans (81.7% 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">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>
<td class="firstcol">Announced Job Cuts</td>
<td>59,688</td>
<td>64,975</td>
<td>3.2%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
</table>
 UK Mortgage Lending Up but Consumer Credit Down  
by <a href="/comment/Curley.html">Louise Curley</a> May 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502e.jpg" width="353">
The British Bankers&#39; Association released figures on mortgage and consumer credit lending today. Outstanding mortgages were up 0.12% from February and 3.54% above March 2005. Consumer credit outstanding, on the contrary, declined 1.82% from February and was 7.18% below March, 2005.
The year-to-year changes in outstanding mortgage and consumer credit have been declining since mid-2004. The deceleration in mortgages has been modest compared to that in consumer credit as can be seen in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502f.jpg" width="353">
The decline in credit card debt is reflected in the decline over the past year or so in retail sales of household goods. The second chart shows the year-to-year change in retail sales of household goods and the net increase in consumer credit outstandings. Both series are seasonally unadjusted.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502g.jpg" width="353">
Banks have been playing a smaller proportional role in mortgage lending as Other Specialist Lenders (Non-bank UK credit grantors and specialist mortgage lenders) have taken a larger share of the market. Banks&#39; share in the market has gone from 72.0% in 2000 to 59.4% in 2005, while that of Other Specialist Lenders has risen from 7.7% to 22.3%. The share of Building Societies has declined moderately from 20.0% to 17.9%. The share of other lenders has been insignificant. The year-to-year changes in outstanding mortgages at Banks and at Other Specialist lenders are shown in the third chart. While the yearly increases in Other Specialist Lenders have been declining they are still increasing at rates of almost 30% compared to about 5% for Banks.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/@U1/@U1.HTM">United Kingdom</a></th>
<th scope="col">Mar 06</th>
<th scope="col">Feb 06</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">BBA Consumer Credit Outstanding (Bil. GBP)</td>
<td>31.2</td>
<td>31.8</td>
<td>33.6</td>
<td>-1.82</td>
<td>-7.18</td>
<td>33.4</td>
<td>34.0</td>
<td>28.7</td>
</tr>
<tr>
<td class="firstcol">BBA Mortgages Outstanding (Bil.GBP)</td>
<td>513.6</td>
<td>513.0</td>
<td>496.1</td>
<td>0.12</td>
<td>3.54</td>
<td>521.1</td>
<td>496.4</td>
<td>468.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;Mortgage Lending by: %</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
<td>2001</td>
<td> 2000 </td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Banks</td>
<td>59.4</td>
<td>61.8</td>
<td>65.9</td>
<td>69.1</td>
<td>41.0</td>
<td>72.0</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Building Societies</td>
<td>&nbsp;17.9</td>
<td>18.2&nbsp;</td>
<td>18.4</td>
<td>18.3&nbsp;</td>
<td>&nbsp;19.2</td>
<td>&nbsp;20.0</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Other Specialist Lenders</td>
<td>22.3</td>
<td>19.6</td>
<td>15.4</td>
<td>12.1</td>
<td>9.7</td>
<td>7.7</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Other Lenders</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501g.jpg" width="353">
China&#39;s balance of payment data for 2005 were released today and, to no one&#39;s surprise, the current account surplus was a record--$160.8 billion, $67.2 billion in the first half of the year and $93.5 in the second half. For the year as a whole, the surplus was $92.2 billion above last year&#39;s surplus of $68.7 billion. (Data for China&#39;s balance of payments are reported only on a semi annual basis.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501i.jpg" width="353">
With its large current account surplus and a net inflow of capital, China has been piling up international reserves as can be seen in the first chart that compares the current account surplus with the increase in reserves. China is now the world&#39;s largest holder of international reserves having surpassed Japan in November 2004 as seen in the second chart.As of December, 2005, China&#39;s holdings of foreign reserves less gold amounted to $822 billion and the latest data for February, 2006, show a further rise to $856 billion.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501h.jpg" width="353">
Data for China&#39;s trade through March 2006 was also released today. The widening gap between exports to and imports from the United States shows no sign of diminishing as can be seen in the third chart.
Data on China&#39;s trade and balance of payments may be found in the Haver CHINA and EMERGEPR data bases. The data on the balance of payments are identical in both data bases, but the data on trade are more detailed in the CHINA data base. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J5/@J5.HTM">China</a>&nbsp; (Bil. US $)</th>
<th scope="col">Mar 06</th>
<th scope="col">Feb 06</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade in Goods</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports</td>
<td>77.9</td>
<td>70.1</td>
<td>61.0</td>
<td>11.1</td>
<td>29.7</td>
<td>762.0</td>
<td>593.3</td>
<td>438.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Imports</td>
<td>63.2</td>
<td>66.4</td>
<td>52.3</td>
<td>-4.8</td>
<td>20.8</td>
<td>660.0</td>
<td>561.2</td>
<td>412.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Balance</td>
<td>14.7</td>
<td>3.7</td>
<td>8.6</td>
<td>11.0 dif</td>
<td>6.1 dif</td>
<td>102.0</td>
<td>32.1</td>
<td>25.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Balance with U. S.</td>
<td>12.6</td>
<td>10.5</td>
<td>9.2</td>
<td>2.1 dif </td>
<td>3.4 dif</td>
<td>114.2</td>
<td>80.3</td>
<td>58.6</td>
</tr>
<tr>
<td class="firstcol">Balance of Payments&nbsp;</td>
<td>H2 06</td>
<td>H1 05</td>
<td>H2 05</td>
<td>H/H dif </td>
<td>Y/Y dif</td>
<td>2005</td>
<td>2004&nbsp;</td>
<td>2003&nbsp;&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Account</td>
<td>160.8</td>
<td>67.3</td>
<td>68.6</td>
<td>93.5</td>
<td>92.2</td>
<td>160.8</td>
<td>68.6</td>
<td>45.9</td>
</tr>
<tr>
<td class="firstcol">Capital Account</td>
<td>&nbsp;4.1</td>
<td>2.2&nbsp;</td>
<td>-0.1&nbsp;</td>
<td>&nbsp;1.9</td>
<td>4.2&nbsp;</td>
<td>4.1&nbsp;</td>
<td>-0.1&nbsp;</td>
<td>-0.0&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Financial Account</td>
<td>58.9</td>
<td>36.1</td>
<td>110.7</td>
<td>22.7</td>
<td>51.9</td>
<td>58.9</td>
<td>110.7</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">Change in Reserves*</td>
<td>-207.0</td>
<td>-100.5</td>
<td>-206.4</td>
<td>-106.6</td>
<td>-0.6</td>
<td>-207.0</td>
<td>-206.4</td>
<td>117.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Errors &amp; Omissions</td>
<td>-16.77</td>
<td>-5.1</td>
<td>27.05</td>
<td>-11.9</td>
<td>-43.8</td>
<td>-16.77</td>
<td>27.05</td>
<td>18.42</td>
</tr>
</tbody>
</table>
</body>
</html>

China's balance of payment data for 2005 were released today and, to no one's surprise, the current account surplus was a record--$160.8 billion, $67.2 billion in the first half of the year and $93.5 in the second half. For the year [...]

No Surprises in China's Balance of Payments and Trade Data

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Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

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High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

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The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

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The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

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- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

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