Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407b.jpg" width="353">
Non-farm payrolls increased 211,000 during March. The gain beat Consensus expectations for a 190,000 rise but the February &amp; January advances were both revised down slightly. Since payrolls started rising in early 2003 employment growth has averaged 1.5% at an annual rate.
From the household survey the unemployment rate fell back to 4.7%. Employment surged 384,000 (2.2% y/y) and the labor force rose 203,000 (1.6% y/y). Consensus expectations had been for an unchanged unemployment rate at 4.8%.
Since early 2003, the household survey&#39;s measure of employment growth has averaged 1.7% (AR).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407a.jpg" width="353">
The gain in construction employment slowed to 7,000 (4.3% y/y) during March following increases the prior two months which were helped by warm winter temperatures and averaged 41,000.
Jobs in private service-producing industries rose 178,000 (1.8% y/y). Jobs in retail trade rose a firm 29,400 (0.9% y/y) though motor vehicle dealers&#39; employment fell and financial sector jobs rose 16,000 (2.3% y/y). Professional &amp; business services employment rose 52,000 (2.8% y/y) while jobs in education &amp; health rose 33,000 (2.4% y/y). Leisure &amp; hospitality employment increased 42,000 (2.2% y/y).
Factory sector payrolls fell another 5,000 after a deepened 10,000 worker decline during February. Employment in the motor vehicles &amp; parts industries fell 1,900 (-2.9% y/y) after a 14,900 February drop. The breadth of gain in factory payrolls over the last three months fell to a 45.2%, indicating broad based job loss.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407c.jpg" width="353">
Government employment rose 24,000 (0.7% y/y) though hiring by the federal government was unchanged (-0.8% y/y). During the last three years the number of federal government jobs has fallen 3.0% but during the same period state &amp; local hiring is up 2.0%
The 0.2% gain in average hourly earnings was half the February rate increase.
Currents and Undercurrents: Changes in the Distribution of Wealth, 1989-2004 from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/pubs/feds/2006/200613/200613pap.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/@EB/@EB01/@EB01.HTM">Employment</a></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">Payroll Employment</td>
<td>211,000</td>
<td>225,000</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-5,000</td>
<td>-10,000</td>
<td>-0.4%</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>33.8</td>
<td>33.7 (Mar &#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>0.2%</td>
<td>0.4%</td>
<td>3.4%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.8%</td>
<td>5.1% (Mar &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
</body>
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Non-farm payrolls increased 211,000 during March. The gain beat Consensus expectations for a 190,000 rise but the February & January advances were both revised down slightly. Since payrolls started rising in early 2003 employment [...]

U.S. Payrolls Up, Unemployment Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407a.jpg" width="353">
Non-farm payrolls increased 211,000 during March. The gain beat Consensus expectations for a 190,000 rise but the February &amp; January advances were both revised down slightly. Since payrolls started rising in early 2003 employment growth has averaged 1.5% at an annual rate.
From the household survey the unemployment rate fell back to 4.7%. Employment surged 384,000 (2.2% y/y) and the labor force rose 203,000 (1.6% y/y). Consensus expectations had been for an unchanged unemployment rate at 4.8%.
Since early 2003, the household survey&#39;s measure of employment growth has averaged 1.7% (AR).
The gain in construction employment slowed to 7,000 (4.3% y/y) during March following increases the prior two months which were helped by warm winter temperatures and averaged 41,000.
Jobs in private service-producing industries rose 178,000 (1.8% y/y). Jobs in retail trade rose a firm 29,400 (0.9% y/y) though motor vehicle dealers&#39; employment fell and financial sector jobs rose 16,000 (2.3% y/y). Professional &amp; business services employment rose 52,000 (2.8% y/y) while jobs in education &amp; health rose 33,000 (2.4% y/y). Leisure &amp; hospitality employment increased 42,000 (2.2% y/y).
Factory sector payrolls fell another 5,000 after a deepened 10,000 worker decline during February. Employment in the motor vehicles &amp; parts industries fell 1,900 (-2.9% y/y) after a 14,900 February drop. The breadth of gain in factory payrolls over the last three months fell to a 45.2%, indicating broad based job loss.
Government employment rose 24,000 (0.7% y/y) though hiring by the federal government was unchanged (-0.8% y/y). During the last three years the number of federal government jobs has fallen 3.0% but during the same period state &amp; local hiring is up 2.0%
The 0.2% gain in average hourly earnings was half the February rate increase.
Currents and Undercurrents: Changes in the Distribution of Wealth, 1989-2004 from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/pubs/feds/2006/200613/200613pap.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/@EB/@EB01/@EB01.HTM">Employment</a></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">Payroll Employment</td>
<td>211,000</td>
<td>225,000</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-5,000</td>
<td>-10,000</td>
<td>-0.4%</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>33.8</td>
<td>33.7 (Mar &#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>0.2%</td>
<td>0.4%</td>
<td>3.4%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.8%</td>
<td>5.1% (Mar &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
Canadian Unemployment Hits 31-Year Low in March; Employers Add 50,000 New Workers 
by <a href="/comment/Stone.html">Carol Stone</a> April 7, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407d.jpg" width="353">
The unemployment rate in Canada eased 0.1% in March to 6.3%, the lowest level since December 1974. Statistics Canada further reported that 50,500 more people had jobs in March, following on rises of 24,700 in February and 26,300 in January. Over the last year, employment has expanded 2.1%, the strongest 12-month increase since May 2004, and as we pointed out yesterday, this compares very favorably with employment gains in most other large industrial countries.
The fall in unemployment was all the more notable as it accompanied a rise in the labor force participation rate, the proportion of the population who have jobs or want them. It picked up from 67.0% in February to 67.2% in March. This ratio had been drifting downward, as people were pulling back from the labor force. But it has been basically flat for about a year now, so that recent declines in unemployment reflect genuine economic improvement, not discouraged workers.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407e.jpg" width="353">
The employment growth is occurring in the service industries, as seen in the table below. Business services, transport &amp; warehousing, heath care and information, culture &amp; recreation are the sectors with the largest gains in March. At the same time, the goods-producing industries have widely divergent patterns. As in many Western countries, manufacturing jobs are declining fairly consistently, and in Canada, so are those at utilities. But construction and mining (including gas and oil production) are both on quite distinct uptrends. While the mining gains are easily explained by high oil prices, we are struck by the long run-up in construction employment. It began growing in 1998 and appears to parallel expansion in residential and civil-engineering projects.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407f.jpg" width="353">
Despite this &quot;good news&quot; on employment and unemployment, Canadian financial markets reacted negatively. They see these favorable economic factors as contributing to interest rate increases, so by Friday noon, the TSE had lost 121 points, right at 1% of its value and 10-year Canadian bond yields added 5 basis points. US markets were responding to the US data in similar fashion. Both currencies, though, were rising, and versus the euro, the Canadian dollar was increasing more than the US dollar. Check DAILY and INTDAILY at the end of the business day today to see how these financial responses evolved over the day as a whole.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CANSIM/@C6/@C6.HTM">Canada&nbsp;</a> (Seasonally Adjusted)</th>
<th scope="col">Mar 2006</th>
<th scope="col">Feb 2006</th>
<th scope="col">Jan 2006</th>
<th scope="col">Year Ago</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">Unemployment Rate (%)</td>
<td>6.3</td>
<td>6.4</td>
<td>6.6</td>
<td>6.9</td>
<td>6.8</td>
<td>7.2</td>
<td>7.6</td>
</tr>
<tr>
<td class="firstcol">Participation Rate (%)</td>
<td>67.2</td>
<td>67.0</td>
<td>67.2</td>
<td>67.2</td>
<td>67.2</td>
<td>67.5</td>
<td>67.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (Change, 000s/%)</td>
<td>+50.5</td>
<td>+24.7</td>
<td>+26.3</td>
<td>2.1%</td>
<td>1.4%</td>
<td>1.8%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Goods-Producing </td>
<td>-9.5</td>
<td>30.5</td>
<td>-34.4</td>
<td>-0.0%</td>
<td>0.2%</td>
<td>1.7%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Service-Producing</td>
<td>+60.0</td>
<td>-5.8</td>
<td>60.7</td>
<td>2.7%</td>
<td>1.8%</td>
<td>1.8%</td>
<td>2.7%</td>
</tr>
</tbody>
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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/060406c.jpg" width="353">
The number of jobs in Israel increased 5,000 in January from December, seasonally adjusted, to 2.59 million, according to data reported today by Israel&#39;s Central Bureau of Statistics (CBS). The gain from a year ago was 79,000 jobs, or 2.9%. The CBS also publishes a subset of the jobs data that excludes foreign workers, mostly Palestinians. There were 82,000 of them in January, up from 70,000 a year ago. So the number of jobs covered by Israeli workers was 2.508 million, up just 1,000 from December and 2.7% from January 2005. Both the total number of jobs and those held by Israelis increased by 3.3% for 2005 as a whole.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406d.jpg" width="353">
The average job paid NIS7,232 for the month of January, about US$1,565. For jobs held by Israelis only, the comparable figure was NIS7,614, about US$1,648. In shekels, both total and Israeli wages were up 1.6% from a year ago. Taking account of inflation, &quot;real&quot; wages have fallen 1.3% for all workers and 1.0% for Israeli workers since January 2005.
While real purchasing power per job in Israel has stagnated over the last few years, the number of jobs themselves has advanced nicely. As we point out frequently here, employment in Europe is nearly at a standstill, and in the US, prior to the release tomorrow of March data, recent trends show roughly 1.5% gains in nonfarm payrolls, only about half the pace in Israel. So midst all the Middle East tension, the Israeli economy is presently able to increase jobs and overall growth as well. In industry data through Q4 2005, accommodation, trade and business services were seeing the greatest percentage job gains.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jan 2006</th>
<th scope="col">Dec 2005</th>
<th scope="col">Year Ago</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 Number of Jobs (thous.)</td>
<td>2,590</td>
<td>2,585</td>
<td>2,511</td>
<td>2,548</td>
<td>2,466</td>
<td>2,425</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>2.9</td>
<td>3.0</td>
<td>--</td>
<td>3.3</td>
<td>2.2</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Jobs ex Foreign Workers (thous.)</td>
<td>2,508</td>
<td>2,507</td>
<td>2,441</td>
<td>2,472</td>
<td>2,393</td>
<td>2,342</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>2.7</td>
<td>2.9</td>
<td>--</td>
<td>3.3</td>
<td>2.8</td>
<td>-0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Wages, All Jobs (NIS)</td>
<td>7,232</td>
<td>7,208</td>
<td>7,138</td>
<td>7,225</td>
<td>7,000</td>
<td>6,863</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>1.6</td>
<td>-1.4</td>
<td>--</td>
<td>3.3</td>
<td>2.1</td>
<td>-2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Wages, ex Foreign Workers (NIS)</td>
<td>7,614</td>
<td>7,636</td>
<td>7,481</td>
<td>7,334</td>
<td>7,081</td>
<td>6,981</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>1.6</td>
<td>-1.2</td>
<td>--</td>
<td>3.1</td>
<td>2.2</td>
<td>-2.5</td>
</tr>
</tbody>
</table>
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The number of jobs in Israel increased 5,000 in January from December, seasonally adjusted, to 2.59 million, according to data reported today by Israel's Central Bureau of Statistics (CBS). The gain from a year ago was 79,000 jobs, or [...]

Employment Grows in Israel; Wages Rise, but Lose Ground to Inflation

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406a.jpg" width="353">
Initial claims for unemployment insurance dropped for the third consecutive period last week. The 5,000 person decline to 299,000 compared to Consensus expectations for 305,000 claims. It followed a 8,000 fall the prior week which was slightly less than initially estimated.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell to 308,500 (-9.9% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406b.jpg" width="353">
Continuing claims for unemployment insurance fell a sharp 22,000 during the latest week following a revised decline of 1,000 the prior period, initially reported as an increase.
The insured rate of unemployment was stable at 1.9% for the seventh week.
The highest insured unemployment rates during the week ending March 18 were in Alaska (5.1%), Michigan (4.5%), Wisconsin (3.5%), Puerto Rico (3.4%), Pennsylvania (3.3%), Rhode Island (3.3%), New Jersey (3.1%), Vermont (3.1%), Massachusetts (3.0%), Connecticut (2.8%), and Oregon (2.8%).
Look Who&#39;s Working Now from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060401/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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">04/01/06</th>
<th scope="col">03/25/06</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">Initial Claims</td>
<td>299</td>
<td>304</td>
<td>-13.6%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,440</td>
<td>-9.0%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance dropped for the third consecutive period last week. The 5,000 person decline to 299,000 compared to Consensus expectations for 305,000 claims. It followed a 8,000 fall the prior week which was [...]

Initial Claims for Jobless Insurance Below Expectations

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406a.jpg" width="353">
Initial claims for unemployment insurance dropped for the third consecutive period last week. The 5,000 person decline to 299,000 compared to Consensus expectations for 305,000 claims. It followed a 8,000 fall the prior week which was slightly less than initially estimated.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell to 308,500 (-9.9% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406b.jpg" width="353">
Continuing claims for unemployment insurance fell a sharp 22,000 during the latest week following a revised decline of 1,000 the prior period, initially reported as an increase.
The insured rate of unemployment was stable at 1.9% for the seventh week.
The highest insured unemployment rates during the week ending March 18 were in Alaska (5.1%), Michigan (4.5%), Wisconsin (3.5%), Puerto Rico (3.4%), Pennsylvania (3.3%), Rhode Island (3.3%), New Jersey (3.1%), Vermont (3.1%), Massachusetts (3.0%), Connecticut (2.8%), and Oregon (2.8%).
Look Who&#39;s Working Now from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060401/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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">04/01/06</th>
<th scope="col">03/25/06</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">Initial Claims</td>
<td>299</td>
<td>304</td>
<td>-13.6%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,440</td>
<td>-9.0%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
Employment Grows in Israel; Wages Rise, but Lose Ground to Inflation 
by <a href="/comment/Stone.html">Carol Stone</a> April 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406c.jpg" width="353">
The number of jobs in Israel increased 5,000 in January from December, seasonally adjusted, to 2.59 million, according to data reported today by Israel&#39;s Central Bureau of Statistics (CBS). The gain from a year ago was 79,000 jobs, or 2.9%. The CBS also publishes a subset of the jobs data that excludes foreign workers, mostly Palestinians. There were 82,000 of them in January, up from 70,000 a year ago. So the number of jobs covered by Israeli workers was 2.508 million, up just 1,000 from December and 2.7% from January 2005. Both the total number of jobs and those held by Israelis increased by 3.3% for 2005 as a whole.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406d.jpg" width="353">
The average job paid NIS7,232 for the month of January, about US$1,565. For jobs held by Israelis only, the comparable figure was NIS7,614, about US$1,648. In shekels, both total and Israeli wages were up 1.6% from a year ago. Taking account of inflation, &quot;real&quot; wages have fallen 1.3% for all workers and 1.0% for Israeli workers since January 2005.
While real purchasing power per job in Israel has stagnated over the last few years, the number of jobs themselves has advanced nicely. As we point out frequently here, employment in Europe is nearly at a standstill, and in the US, prior to the release tomorrow of March data, recent trends show roughly 1.5% gains in nonfarm payrolls, only about half the pace in Israel. So midst all the Middle East tension, the Israeli economy is presently able to increase jobs and overall growth as well. In industry data through Q4 2005, accommodation, trade and business services were seeing the greatest percentage job gains.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jan 2006</th>
<th scope="col">Dec 2005</th>
<th scope="col">Year Ago</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 Number of Jobs (thous.)</td>
<td>2,590</td>
<td>2,585</td>
<td>2,511</td>
<td>2,548</td>
<td>2,466</td>
<td>2,425</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>2.9</td>
<td>3.0</td>
<td>--</td>
<td>3.3</td>
<td>2.2</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Jobs ex Foreign Workers (thous.)</td>
<td>2,508</td>
<td>2,507</td>
<td>2,441</td>
<td>2,472</td>
<td>2,393</td>
<td>2,342</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>2.7</td>
<td>2.9</td>
<td>--</td>
<td>3.3</td>
<td>2.8</td>
<td>-0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Wages, All Jobs (NIS)</td>
<td>7,232</td>
<td>7,208</td>
<td>7,138</td>
<td>7,225</td>
<td>7,000</td>
<td>6,863</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>1.6</td>
<td>-1.4</td>
<td>--</td>
<td>3.3</td>
<td>2.1</td>
<td>-2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Wages, ex Foreign Workers (NIS)</td>
<td>7,614</td>
<td>7,636</td>
<td>7,481</td>
<td>7,334</td>
<td>7,081</td>
<td>6,981</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>1.6</td>
<td>-1.2</td>
<td>--</td>
<td>3.1</td>
<td>2.2</td>
<td>-2.5</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/060405e.jpg" width="353">
Commercial real estate has increased significantly in importance as an investment medium in recent years. Securitization of commercial mortgage securities and direct interests in portfolios of properties join residential real estate as outlets for capital. But it is complicated to assess the returns on such investments. Each property is sizable and very different from every other property. So, unlike other objects to be priced, there are not simple rules-of-thumb or statistical properties that can be exploited to derive valuations.
Just in mid-February, the Massachusetts Institute of Technology&#39;s Center for Real Estate introduced a helpful tool in this process, the Transactions-Based Index. A client brought these new quarterly series to Haver&#39;s attention, and they were added to our basic USECON product about two weeks ago.
The Total Return Index shows that commercial real estate holdings earned 34.3% in 2005, following valuation gains of 16.0% in 2004 and 10.0% in 2003. Returns based on price change alone were 29.4% last year, 10.7% in 2004 and 4.2% in 2003.
These figures are weighted indexes for &quot;All Properties&quot;, including apartments, industrial buildings, offices and retail centers. Sub-indexes are available for each one of these segments. Retail properties were the strongest in 2005, with a 40.2% total return, while industrial buildings earned &quot;only&quot; 24.2%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060405f.jpg" width="353">
The secret to these indexes is a proprietary database maintained by the National Council of Real Estate Investment Fiduciaries (NCREIF). This group is a trade association of pension funds managers; they collectively own some $200 billion worth of commercial properties numbering about 5,000. Data on pricing and income is taken from actual transactions involving these properties.
Further, since the properties are all distinct, the &quot;average&quot; value of transactions cannot by obtained by simply toting up individual prices and dividing by some appropriate number. The indexes are compiled by appeal to the same kind of weighted &quot;hedonic&quot;, quality-adjusting econometric techniques used by BEA and BLS for constructing many of the price indexes used by economists every day. The NCREIF database has been maintained for many years, allowing the MIT econometricians to construct 22 years of history for the &quot;All Property&quot; index and 12 years for the individual property types. A press release and more detailed description of the data are found <a href="http://web.mit.edu/cre/news/060216-tbi.html">here</a> on the website of the MIT Center for Real Estate. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">MIT Commercial Real Estate &quot;TBI&quot; Indexes</th>
<th scope="col">Q4 2005</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
Year-End
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Total Return Index</td>
<td>668.0</td>
<td>638.9</td>
<td>601.1</td>
<td>497.1</td>
<td>428.5</td>
<td>389.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Yr/Yr % Change</td>
<td>34.3</td>
<td>31.8</td>
<td>26.0</td>
<td>16.0</td>
<td>10.0</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">TBI Price Index</td>
<td>194.3</td>
<td>187.3</td>
<td>177.7</td>
<td>150.2</td>
<td>135.7</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Yr/Yr % Change</td>
<td>29.4</td>
<td>26.6</td>
<td>20.6</td>
<td>10.7</td>
<td>4.2</td>
<td>4.3</td>
</tr>
</tbody>
</table>
</body>
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Commercial real estate has increased significantly in importance as an investment medium in recent years. Securitization of commercial mortgage securities and direct interests in portfolios of properties join residential real estate [...]

MIT Center for Real Estate Compiles Price and Total Return Indexes for Commercial Real Estate Transactions: [...]

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060405b.jpg" width="353">
The total number of mortgage applications rose for the second consecutive period. The 7.2% increase last week limited the average decline during March to 1.0% after a 6.3% drop during February.
Purchase applications jumped 8.4% at month end and the average level during March ticked up 0.2% after a 10.2% decline during February.
During the last ten years there has been a 54% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance also recovered with a 5.3% increase last week though the average March level fell 2.4% m/m after a 2.0% February drop.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060405a.jpg" width="353">
The effective interest rate on a conventional 30-year mortgage rose sharply. The sixteen basis point increase w/w lifted the effective rate to 6.72% and the rate on 15-year financing likewise surged to 6.43%, its highest since June 2002. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities and during the last ten years there has been a (negative) 82% correlation between purchase applications and the effective rate on a 30-Year mortgage.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
A New Perspective on Policy, yesterday&#39;s speech by Dallas Federal Reserve Bank President &amp; CEO Richard W. Fisher, is available <a href="http://www.dallasfed.org/news/speeches/fisher/2006/fs060404.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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">03/31/06</th>
<th scope="col">03/24/06</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 class="odd">
<td class="firstcol">Total Market Index</td>
<td>612.8</td>
<td>571.7</td>
<td>-4.9%</td>
<td>708.6</td>
<td>735.1</td>
<td>1,067.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>438.2</td>
<td>404.1</td>
<td>-1.7%</td>
<td>470.9</td>
<td>454.5</td>
<td>395.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,640.8</td>
<td>1,558.4</td>
<td>-8.8%</td>
<td>2,092.3</td>
<td>2,366.8</td>
<td>4,981.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications rose for the second consecutive period. The 7.2% increase last week limited the average decline during March to 1.0% after a 6.3% drop during February. Purchase applications jumped 8.4% at [...]

Mortgage Applications Manage Late-March Recovery

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060405c.jpg" width="353">
The March Business Activity Index for the non-manufacturing sector inched up to 60.5 from 60.1 during February, reported the Institute for Supply Management (ISM). These levels are much improved versus the low January reading of 56.8 and the latest beat Consensus expectations for a decline to 59.0.
Since the series&#39; inception in 1997 there has been a 53% 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 improved to the highest level this year, though at 59.5 remained below the 2005 average. The employment index backpedaled to 54.6 and so far this year is down slightly 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. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060405d.jpg" width="353">
Pricing power fell again and has fallen continually since the series peak last September. 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.
&quot;This is Bangalore Calling: Hang Up or Speed Dial? What Technology-Enabled International Trade in Services Means for the U.S. Economy and Workforce from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/Research/Com2005/0115.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/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#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>60.5</td>
<td>60.1</td>
<td>61.8</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>60.5</td>
<td>64.8</td>
<td>65.9</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>


</html>

The March Business Activity Index for the non-manufacturing sector inched up to 60.5 from 60.1 during February, reported the Institute for Supply Management (ISM). These levels are much improved versus the low January reading of 56.8 [...]

ISM Nonmanufacturing Index Sustained Improvement

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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Andrew Cates

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

250507Z1.jpg

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

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

250507Z2.jpg

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

250507Z3.jpg

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

250507Z4.jpg

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

250507Z5.jpg

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

250507Z6.jpg

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

Charts of the Week: Relief Rally Meets Recession Risk

250507J1.jpg

250507K1.jpg

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

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

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

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

250507L1.jpg

250507M1.jpg

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

FOMC Targeted Funds Rate Range Is Unchanged; Increased Risks Acknowledged

Kathleen Stephansen, CBE

250507F4.jpg

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

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

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

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

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


U.S. Consumer Credit Rebounded in March

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

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

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

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

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

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

Mortgage Applications Surge as Interest Rates Ease Last Week

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

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

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

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

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

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

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

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

Economy in Brief

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