Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307a.jpg" width="353">
Chain store sales added 0.2% during the opening week of March to the 1.5% surge during the prior period, according to the International Council of Shopping Centers (ICSC)-UBS survey.
The gain lifted the level of sales in early March 1.4% above the February average which rose 1.1% from January.
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 leading indicator of chain store sales rose 0.3% late in February and the average level of the leading indicator fell 1.6% during the month.
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.

<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">03/04/06</th>
<th scope="col">02/25/06</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">Total Weekly Chain Store Sales</td>
<td>470.1</td>
<td>469.0</td>
<td>4.3%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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Chain store sales added 0.2% during the opening week of March to the 1.5% surge during the prior period, according to the International Council of Shopping Centers (ICSC)-UBS survey. The gain lifted the level of sales in early March [...]

Chain Store Sales Higher Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307c.jpg" width="353">
For 4Q &#39;05, the decline in non-farm labor productivity was little revised at -0.5% versus the initial estimate of a 0.6% fall. It was the first decline in output per hour since 1Q &#39;01 and followed an average gain of 3.7% during the prior ten quarters. Consensus expectations had been for a slight upward revision to a 0.1% decline.
The initially reported slowdown in output growth which lowered productivity was moderated somewhat to 1.5% (3.7% y/y) from 4.7% during 3Q but hours worked rose slightly faster than initially estimated; 2.0% (1.2% y/y) versus a 0.4% 3Q rise.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307b.jpg" width="353">
Growth in compensation costs was unrevised at 2.8% but the 5.5% rise during 3Q was upwardly revised. Unit labor cost growth of 3.3% was the quickest in a year though y/y growth of 1.3% represented an easing of cost pressures.
Factory sector productivity growth was revised upward to 4.7% (4.3% y/y) from 3.9% following a 3.7% gain during 3Q. Compensation growth of 1.8% (4.5% y/y) was little revised and unit labor costs in the factory sector fell 2.8% (0.2% y/y).
The implicit price deflator for the nonfarm business sector was revised slightly higher to 3.4% (3.1% y/y) from 3.2%.
Stop Paying More for Less: Ways to Boost Productivity in Higher Education from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/publications/re/2006/a/pages/higher_education.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">4Q &#39;05 (Revised)</th>
<th scope="col">4Q &#39;05 (Prelim.)</th>
<th scope="col">3Q &#39;05</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">Output per Hour</td>
<td>-0.5%</td>
<td>-0.6%</td>
<td>4.5%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>3.4%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>2.8%</td>
<td>2.8%</td>
<td>5.5%</td>
<td>3.8%</td>
<td>5.4%</td>
<td>4.5%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.3%</td>
<td>3.5%</td>
<td>1.2%</td>
<td>1.3%</td>
<td>2.6%</td>
<td>1.1%</td>
<td>0.0%</td>
</tr>
</tbody>
</table>
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For 4Q '05, the decline in non-farm labor productivity was little revised at -0.5% versus the initial estimate of a 0.6% fall. It was the first decline in output per hour since 1Q '01 and followed an average gain of 3.7% during the [...]

Decline in 4Q U.S. Productivity Little Revised

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307c.jpg" width="353">
For 4Q &#39;05, the decline in non-farm labor productivity was little revised at -0.5% versus the initial estimate of a 0.6% fall. It was the first decline in output per hour since 1Q &#39;01 and followed an average gain of 3.7% during the prior ten quarters. Consensus expectations had been for a slight upward revision to a 0.1% decline.
The initially reported slowdown in output growth which lowered productivity was moderated somewhat to 1.5% (3.7% y/y) from 4.7% during 3Q but hours worked rose slightly faster than initially estimated; 2.0% (1.2% y/y) versus a 0.4% 3Q rise.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307b.jpg" width="353">
Growth in compensation costs was unrevised at 2.8% but the 5.5% rise during 3Q was upwardly revised. Unit labor cost growth of 3.3% was the quickest in a year though y/y growth of 1.3% represented an easing of cost pressures.
Factory sector productivity growth was revised upward to 4.7% (4.3% y/y) from 3.9% following a 3.7% gain during 3Q. Compensation growth of 1.8% (4.5% y/y) was little revised and unit labor costs in the factory sector fell 2.8% (0.2% y/y).
The implicit price deflator for the nonfarm business sector was revised slightly higher to 3.4% (3.1% y/y) from 3.2%.
Stop Paying More for Less: Ways to Boost Productivity in Higher Education from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/publications/re/2006/a/pages/higher_education.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">4Q &#39;05 (Revised)</th>
<th scope="col">4Q &#39;05 (Prelim.)</th>
<th scope="col">3Q &#39;05</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">Output per Hour</td>
<td>-0.5%</td>
<td>-0.6%</td>
<td>4.5%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>3.4%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>2.8%</td>
<td>2.8%</td>
<td>5.5%</td>
<td>3.8%</td>
<td>5.4%</td>
<td>4.5%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.3%</td>
<td>3.5%</td>
<td>1.2%</td>
<td>1.3%</td>
<td>2.6%</td>
<td>1.1%</td>
<td>0.0%</td>
</tr>
</tbody>
</table>
Chain Store Sales Higher Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 7, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307a.jpg" width="353">
Chain store sales added 0.2% during the opening week of March to the 1.5% surge during the prior period, according to the International Council of Shopping Centers (ICSC)-UBS survey.
The gain lifted the level of sales in early March 1.4% above the February average which rose 1.1% from January.
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 leading indicator of chain store sales rose 0.3% late in February and the average level of the leading indicator fell 1.6% during the month.
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.

<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">03/04/06</th>
<th scope="col">02/25/06</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">Total Weekly Chain Store Sales</td>
<td>470.1</td>
<td>469.0</td>
<td>4.3%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
 Foreign Demand for German Manufactures Continues to Boost New Orders 
by <a href="/comment/Curley.html">Louise Curley</a> March 7, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307d.jpg" width="353">
Foreign new orders for German manufactures rose 1.6% in January and were 16.2% above January, 2005. Even new orders from domestic sources, which were down slightly in January from December, were 5.7% above January, 2005. Year-to-year sales data were less dramatic, but still positive, with foreign sales 7.3% higher than January, 2005 and domestic sales, 0.9%. A breakdown of foreign orders between those from the Euro Zone and those from outside the Euro Zone is available from October, 2004 to date. In January, 2006, new orders from the Euro Zone declined 1.9% from December, but were 17.5% above January, 2005, Orders from countries outside the Euro Zone, rose 8.9% in January and were 15.1% above January, 2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307e.jpg" width="353">
Because of the volatility in the sales and new order series, we have used three month moving averages to track longer term trends. The first chart shows the trend of new orders from, and sales to, foreign sources. New foreign orders have shown a particularly strong upward trend since early 2005. Currently, new foreign orders are running ahead of sales, suggesting there is support for continued increases in sales.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060307f.jpg" width="353">
The same trends are evident in the case of domestic new orders and sales, as shown in the second chart. Both domestic new orders and domestic sales, however, still lag well behind foreign new orders and sales. The third chart compares domestic and foreign sales. On a three month average basis, domestic sales in January, 2006 were barely--1.2%--higher than the January 2001 average. On the same basis, foreign sales were up 21.3% over the same period. 

<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/GERMANY/@D6/@D6.HTM">German New Orders and Sales (2000=100)</a></th>
<th scope="col">Jan 06</th>
<th scope="col">Dec 05</th>
<th scope="col">Jan 05</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2005&nbsp; </th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales</td>
<td>112.9</td>
<td>112.9</td>
<td>109.0</td>
<td>0.00</td>
<td>3.58</td>
<td>110.1</td>
<td>105.5</td>
<td>100.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic&nbsp;</td>
<td>103.3</td>
<td>103.3</td>
<td>102.4</td>
<td>0.00</td>
<td>0.88</td>
<td>101.9</td>
<td>99.3</td>
<td>97.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Foreign</td>
<td>128.4</td>
<td>128.4</td>
<td>119.7</td>
<td>0.00</td>
<td>7.29</td>
<td>123.5</td>
<td>115.6</td>
<td>106.7</td>
</tr>
<tr>
<td class="firstcol">Total New Orders</td>
<td>119.5</td>
<td>117.6</td>
<td>107.8</td>
<td>1.62</td>
<td>10.85</td>
<td>111.5</td>
<td>105.1</td>
<td>99.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>104.6</td>
<td>104.8</td>
<td>99.0</td>
<td>-0.19</td>
<td>5.66</td>
<td>101.2</td>
<td>98.3</td>
<td>94.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Foreign</td>
<td>&nbsp;138.2</td>
<td>133.5&nbsp;</td>
<td>118.9&nbsp;</td>
<td>3.52&nbsp;</td>
<td>16.23&nbsp;</td>
<td>124.4&nbsp;</td>
<td>113.5&nbsp;</td>
<td>104.3&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Euro Zone</td>
<td>136.9</td>
<td>139.5</td>
<td>116.5</td>
<td>-1.86</td>
<td>17.51</td>
<td>120.3</td>
<td>n.a.</td>
<td>n.a.</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Non Euro Zone</td>
<td>139.4</td>
<td>128.0</td>
<td>121.1</td>
<td>8.91</td>
<td>15.11</td>
<td>128.2</td>
<td>n.a.</td>
<td>n.a.</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/060306d.jpg" width="353">
Thailand released data on its fourth quarter Gross Domestic Product today. GDP in the fourth quarter was 4.71% above the fourth quarter of 2004. For the year as a whole, the increase in GDP was 4.48%, compared with a rise of 6.16% last year. Slower growth in private consumption, gross fixed capital formation and exports of goods and services outweighed the positive impacts of lower imports, higher inventory accumulation and a sharp increase in government consumption expenditures.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306e.jpg" width="353">
With the release of Thailand&#39;s data, 2005 data for all the countries, except Pakistan and Vietnam, in the Haver Data Base EMERGEPR are now available. (Data for Pakistan and Vietnam are reported only on an annual basis. The latest data are for 2004.)
Growth in most countries was below that of 2004. The exceptions were China, India and Indonesia. Growth in China and India showed little trend during the year, but was maintained at high levels--above 7% for India and above 9% for China. While growth in Indonesia, averaged an increase in 2005, the trend throughout the year was downward.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306f.jpg" width="353">
The quarterly trend of year over year growth varied. In Malaysia, as in Indonesia, the trend was downward as shown in the first chart. In Singapore, South Korea, the Philippines and in Taiwan, there was a definite upward trend during the year. The second chart shows the year to year percent change in GDP for South Korea and Taiwan.Growth in Hong Kong and Thailand, like India and China showed little trend during the year. The year to year percent changes in GDP for these countries are shown in the third chart. 

<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/EMERGEPR/@PQ/@PQ2/@PQ2.HTM">Gross Domestic Product </a> &nbsp;Y/Y % Change</th>
<th scope="col">Q4 05 %</th>
<th scope="col">Q3 05 %</th>
<th scope="col">Q2 05 %</th>
<th scope="col">Q1 05 %</th>
<th scope="col">2005 %&nbsp;</th>
<th scope="col">2004 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">China</td>
<td>9.9</td>
<td>9.8</td>
<td>10.1</td>
<td>9.9</td>
<td>9.9</td>
<td>9.5</td>
</tr>
<tr>
<td class="firstcol">India</td>
<td>7.71</td>
<td>7.93</td>
<td>8.22</td>
<td>7.09</td>
<td>7.74</td>
<td>7.51</td>
</tr>
<tr class="odd">
<td class="firstcol">Hong Kong</td>
<td>7.38</td>
<td>7.82</td>
<td>7.35</td>
<td>6.57</td>
<td>7.28</td>
<td>8.60</td>
</tr>
<tr>
<td class="firstcol">Indonesia</td>
<td>4.92</td>
<td>5.67</td>
<td>5.64</td>
<td>6.21</td>
<td>5.60</td>
<td>5.06</td>
</tr>
<tr class="odd">
<td class="firstcol">Malaysia</td>
<td>5.12</td>
<td>5.25</td>
<td>4.35</td>
<td>6.20</td>
<td>5.23</td>
<td>7.14</td>
</tr>
<tr>
<td class="firstcol">Philippines</td>
<td>6.20</td>
<td>4.49</td>
<td>5.15&nbsp;</td>
<td>&nbsp;4.49</td>
<td>5.09&nbsp;</td>
<td>6.01&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Singapore</td>
<td>8.45&nbsp;</td>
<td>7.60</td>
<td>5.70</td>
<td>3.57</td>
<td>6.35</td>
<td>8.72</td>
</tr>
<tr>
<td class="firstcol">South Korea</td>
<td>5.39</td>
<td>4.55</td>
<td>3.39</td>
<td>2.75</td>
<td>4.03</td>
<td>4.66</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan</td>
<td>6.51</td>
<td>4.40</td>
<td>3.02</td>
<td>2.59</td>
<td>4.12</td>
<td>6.13</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>4.71</td>
<td>5.40</td>
<td>4.54</td>
<td>3.26</td>
<td>4.48</td>
<td>6.16</td>
</tr>
</tbody>
</table>
</body>
</html>

Thailand released data on its fourth quarter Gross Domestic Product today. GDP in the fourth quarter was 4.71% above the fourth quarter of 2004. For the year as a whole, the increase in GDP was 4.48%, compared with a rise of 6.16% [...]

2005 GDP in Thailand: Last of Major Pacific Rim Countries to Report

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306c.jpg" width="353">
Factory inventories grew 0.5% in January following an upwardly revised 0.6% increase during December. Though the rate of inventory accumulation slowed sharply during the last year, the 3.5% y/y growth contrasts with outright decumulation from 2001 to 2003 and probably suggests only cautious management rather than a pessimistic outlook.
A 1.1% (2.4% y/y) increase in primary metals inventories was accompanied by a 1.1% (2.1% y/y) rise in fabricated metals, but both paled next to a 1.7% (6.9% y/y) gain in electrical equipment and a 1.1% (5.8% y/y) increase in machinery.
Total factory orders dropped 4.5% from December and the advance report of a 10.2% plunge in durable goods orders was mitigated only slightly to -9.9%. The drop reflected a huge 68.3% (+61.4% y/y) decline in nondefense aircraft and a 20.9% (+57.4% y/y) drop in defense aircraft &amp; parts. Factory orders less the transportation sector altogether rose 1.6% (8.3% y/y). 
Factory shipments increased 0.3% but less transportation shipments rose 1.4% (7.5% y/y), a gain inflated only slightly by higher petroleum prices.
Unfilled orders fell 0.7% after the 2.6% surge which was powered by higher aircraft orders. Less the transportation sector, backlogs rose 0.4% (10.5% y/y) for the second consecutive month.<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">Jan</th>
<th scope="col">Dec</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>0.5%</td>
<td>0.6%</td>
<td>3.5%</td>
<td>4.4%</td>
<td>7.7%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>-4.5%</td>
<td>1.6%</td>
<td>6.9%</td>
<td>8.5%</td>
<td>9.3%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.3%</td>
<td>2.4%</td>
<td>7.2%</td>
<td>7.4%</td>
<td>9.5%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>-0.7%</td>
<td>2.6%</td>
<td>16.1%</td>
<td>16.5%</td>
<td>8.4%</td>
<td>8.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Factory inventories grew 0.5% in January following an upwardly revised 0.6% increase during December. Though the rate of inventory accumulation slowed sharply during the last year, the 3.5% y/y growth contrasts with outright [...]

U.S. Factory Inventories Up, Orders Drop Belies Factory Strength

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306a.jpg" width="353">
Crude oil prices have been quite strong of late. On Friday, spot WTI crude stood at $63.68 per barrel. Still down slightly from the early year highs near $68, prices have recovered from below $58.00 just two weeks ago.
That strength fueled inflationary concerns generally and lifted Friday&#39;s gold price to $565.00 per ounce, up $26 from two weeks earlier. Since 1980 there has been a 66% correlation between the level of gold prices and the y/y change in consumer prices.
Also during the last two weeks, industrial metal prices were strong due to indications of a resilient factory sector. The JoC-ECRI Industrial Metals Prices Index rose 4.1% (14.8% y/y) since mid-February due to a 7.8% (21.3% y/y) rise in aluminum ingot prices and a 2.7% (52.1% y/y) gain in high grade copper. In addition, prices of stainless steel scrap are up 18.8% (-4.3% y/y) since year end &#39;05.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306b.jpg" width="353">
The laggard on the pricing scene has been natural gas. As of Friday, The Henry Hub price for gas fell to $6.59/mmbtu (-1.6% y/y), nearly half the high of $12.72 averaged during December. January&#39;s record warm temperatures did drop to a more seasonable cold during February, but warm temperatures during the last week hint that the end of the heating season is near.
Retail gasoline prices at $2.25 (16.6% y/y) per gallon also are off the earlier lows but very recently have fallen 10 cents from late January.
The Economic Outlook for the United States, a speech by Federal Reserve Vice Chairman Roger W. Ferguson, Jr. on Friday, is available <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060303/default.htm"> 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/@W4.HTM">Weekly Prices</a></th>
<th scope="col">02/28/06</th>
<th scope="col">12/27/05</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">Light Sweet Crude Oil, WTI&nbsp; (per bbl.)</td>
<td>$61.42</td>
<td>$58.16</td>
<td>18.8%</td>
<td>$58.16</td>
<td>$41.78</td>
<td>$32.78</td>
</tr>
<tr>
<td class="firstcol">Gold: Handy &amp; Harmon (per Troy Oz.)</td>
<td>$556.00</td>
<td>$568.75</td>
<td>28.3%</td>
<td>$507.40</td>
<td>$443.40</td>
<td>$416.25</td>
</tr>
</tbody>
</table>
</body>
</html>

Crude oil prices have been quite strong of late. On Friday, spot WTI crude stood at $63.68 per barrel. Still down slightly from the early year highs near $68, prices have recovered from below $58.00 just two weeks ago. That strength [...]

Commodity Prices Strong - Except Natural Gas

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306a.jpg" width="353">
Crude oil prices have been quite strong of late. On Friday, spot WTI crude stood at $63.68 per barrel. Still down slightly from the early year highs near $68, prices have recovered from below $58.00 just two weeks ago.
That strength fueled inflationary concerns generally and lifted Friday&#39;s gold price to $565.00 per ounce, up $26 from two weeks earlier. Since 1980 there has been a 66% correlation between the level of gold prices and the y/y change in consumer prices.
Also during the last two weeks, industrial metal prices were strong due to indications of a resilient factory sector. The JoC-ECRI Industrial Metals Prices Index rose 4.1% (14.8% y/y) since mid-February due to a 7.8% (21.3% y/y) rise in aluminum ingot prices and a 2.7% (52.1% y/y) gain in high grade copper. In addition, prices of stainless steel scrap are up 18.8% (-4.3% y/y) since year end &#39;05.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306b.jpg" width="353">
The laggard on the pricing scene has been natural gas. As of Friday, The Henry Hub price for gas fell to $6.59/mmbtu (-1.6% y/y), nearly half the high of $12.72 averaged during December. January&#39;s record warm temperatures did drop to a more seasonable cold during February, but warm temperatures during the last week hint that the end of the heating season is near.
Retail gasoline prices at $2.25 (16.6% y/y) per gallon also are off the earlier lows but very recently have fallen 10 cents from late January.
The Economic Outlook for the United States, a speech by Federal Reserve Vice Chairman Roger W. Ferguson, Jr. on Friday, is available <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060303/default.htm"> 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/@W4.HTM">Weekly Prices</a></th>
<th scope="col">02/28/06</th>
<th scope="col">12/27/05</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">Light Sweet Crude Oil, WTI&nbsp; (per bbl.)</td>
<td>$61.42</td>
<td>$58.16</td>
<td>18.8%</td>
<td>$58.16</td>
<td>$41.78</td>
<td>$32.78</td>
</tr>
<tr>
<td class="firstcol">Gold: Handy &amp; Harmon (per Troy Oz.)</td>
<td>$556.00</td>
<td>$568.75</td>
<td>28.3%</td>
<td>$507.40</td>
<td>$443.40</td>
<td>$416.25</td>
</tr>
</tbody>
</table>
U.S. Factory Inventories Up, Orders Drop Belies Factory Strength 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306c.jpg" width="353">
Factory inventories grew 0.5% in January following an upwardly revised 0.6% increase during December. Though the rate of inventory accumulation slowed sharply during the last year, the 3.5% y/y growth contrasts with outright decumulation from 2001 to 2003 and probably suggests only cautious management rather than a pessimistic outlook.
A 1.1% (2.4% y/y) increase in primary metals inventories was accompanied by a 1.1% (2.1% y/y) rise in fabricated metals, but both paled next to a 1.7% (6.9% y/y) gain in electrical equipment and a 1.1% (5.8% y/y) increase in machinery.
Total factory orders dropped 4.5% from December and the advance report of a 10.2% plunge in durable goods orders was mitigated only slightly to -9.9%. The drop reflected a huge 68.3% (+61.4% y/y) decline in nondefense aircraft and a 20.9% (+57.4% y/y) drop in defense aircraft &amp; parts. Factory orders less the transportation sector altogether rose 1.6% (8.3% y/y). 
Factory shipments increased 0.3% but less transportation shipments rose 1.4% (7.5% y/y), a gain inflated only slightly by higher petroleum prices.
Unfilled orders fell 0.7% after the 2.6% surge which was powered by higher aircraft orders. Less the transportation sector, backlogs rose 0.4% (10.5% y/y) for the second consecutive month.<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">Jan</th>
<th scope="col">Dec</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>0.5%</td>
<td>0.6%</td>
<td>3.5%</td>
<td>4.4%</td>
<td>7.7%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>-4.5%</td>
<td>1.6%</td>
<td>6.9%</td>
<td>8.5%</td>
<td>9.3%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.3%</td>
<td>2.4%</td>
<td>7.2%</td>
<td>7.4%</td>
<td>9.5%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>-0.7%</td>
<td>2.6%</td>
<td>16.1%</td>
<td>16.5%</td>
<td>8.4%</td>
<td>8.0%</td>
</tr>
</tbody>
</table>
2005 GDP in Thailand:  Last of Major Pacific Rim Countries to Report 
by <a href="/comment/Curley.html">Louise Curley</a> March 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306d.jpg" width="353">
Thailand released data on its fourth quarter Gross Domestic Product today. GDP in the fourth quarter was 4.71% above the fourth quarter of 2004. For the year as a whole, the increase in GDP was 4.48%, compared with a rise of 6.16% last year. Slower growth in private consumption, gross fixed capital formation and exports of goods and services outweighed the positive impacts of lower imports, higher inventory accumulation and a sharp increase in government consumption expenditures.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306e.jpg" width="353">
With the release of Thailand&#39;s data, 2005 data for all the countries, except Pakistan and Vietnam, in the Haver Data Base EMERGEPR are now available. (Data for Pakistan and Vietnam are reported only on an annual basis. The latest data are for 2004.)
Growth in most countries was below that of 2004. The exceptions were China, India and Indonesia. Growth in China and India showed little trend during the year, but was maintained at high levels--above 7% for India and above 9% for China. While growth in Indonesia, averaged an increase in 2005, the trend throughout the year was downward.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060306f.jpg" width="353">
The quarterly trend of year over year growth varied. In Malaysia, as in Indonesia, the trend was downward as shown in the first chart. In Singapore, South Korea, the Philippines and in Taiwan, there was a definite upward trend during the year. The second chart shows the year to year percent change in GDP for South Korea and Taiwan.Growth in Hong Kong and Thailand, like India and China showed little trend during the year. The year to year percent changes in GDP for these countries are shown in the third chart. 

<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/EMERGEPR/@PQ/@PQ2/@PQ2.HTM">Gross Domestic Product </a> &nbsp;Y/Y % Change</th>
<th scope="col">Q4 05 %</th>
<th scope="col">Q3 05 %</th>
<th scope="col">Q2 05 %</th>
<th scope="col">Q1 05 %</th>
<th scope="col">2005 %&nbsp;</th>
<th scope="col">2004 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">China</td>
<td>9.9</td>
<td>9.8</td>
<td>10.1</td>
<td>9.9</td>
<td>9.9</td>
<td>9.5</td>
</tr>
<tr>
<td class="firstcol">India</td>
<td>7.71</td>
<td>7.93</td>
<td>8.22</td>
<td>7.09</td>
<td>7.74</td>
<td>7.51</td>
</tr>
<tr class="odd">
<td class="firstcol">Hong Kong</td>
<td>7.38</td>
<td>7.82</td>
<td>7.35</td>
<td>6.57</td>
<td>7.28</td>
<td>8.60</td>
</tr>
<tr>
<td class="firstcol">Indonesia</td>
<td>4.92</td>
<td>5.67</td>
<td>5.64</td>
<td>6.21</td>
<td>5.60</td>
<td>5.06</td>
</tr>
<tr class="odd">
<td class="firstcol">Malaysia</td>
<td>5.12</td>
<td>5.25</td>
<td>4.35</td>
<td>6.20</td>
<td>5.23</td>
<td>7.14</td>
</tr>
<tr>
<td class="firstcol">Philippines</td>
<td>6.20</td>
<td>4.49</td>
<td>5.15&nbsp;</td>
<td>&nbsp;4.49</td>
<td>5.09&nbsp;</td>
<td>6.01&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Singapore</td>
<td>8.45&nbsp;</td>
<td>7.60</td>
<td>5.70</td>
<td>3.57</td>
<td>6.35</td>
<td>8.72</td>
</tr>
<tr>
<td class="firstcol">South Korea</td>
<td>5.39</td>
<td>4.55</td>
<td>3.39</td>
<td>2.75</td>
<td>4.03</td>
<td>4.66</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan</td>
<td>6.51</td>
<td>4.40</td>
<td>3.02</td>
<td>2.59</td>
<td>4.12</td>
<td>6.13</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>4.71</td>
<td>5.40</td>
<td>4.54</td>
<td>3.26</td>
<td>4.48</td>
<td>6.16</td>
</tr>
</tbody>
</table>
</body>
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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/060303d.jpg" width="353">
GDP growth in the Euro-Zone slowed in Q4 to 0.3% from 0.7% in Q3, according to the first full breakdown of Q4 data published this morning by Eurostat. These real growth rates are quoted in chained 2000 euros, adopted as the pricing methodology by Eurostat just three months ago.
Several major expenditure components of GDP contributed to the lower growth; most notably, private consumption fell outright by 0.2% and was up a sluggish 0.8% from a year ago. This was among the smallest year-on-year increases in the 10-year history of the data calculated on this basis. However, as we noted here yesterday, retail trade, at least in Germany, turned up sharply in January; perhaps this is a precursor to a better performance for consumer spending in general this quarter.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060303e.jpg" width="353">
Fixed capital formation moderated to a 0.8% gain in Q4 from 1.1% in Q3. This is still a respectable performance and brought the year to 2.2%, the strongest gain since the tech slowdown began in 2000.
Net exports decreased, encompassing smaller gains in both exports and imports. As with investment, though, the Q4 result followed much stronger outcomes in Q2 and Q3, so can hardly be characterized as &quot;weak&quot; in a broader context. Indeed, observers, including ourselves have noted repeatedly that the export sector is a main support to the European economies at present.
So 2005 ended at a slow pace in Europe. But as mentioned above, retail trade showed some life in Germany already in January, and sentiment surveys have also improved. The Olympics may even give some boost to this quarter&#39;s performance. The ECB policymakers must believe gains of that sort will take hold, as they raised their key interest rates yesterday for the second time in three months. M. Trichet&#39;s announcement in fact indicated a concern that recently improved economic activity would threaten inflation, which is already hovering above the desired 2% pace. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@U2/@U219/@U21904/@U219042/@U219042.HTM">EuroZone12: GDP (Chained 2000 Euros)</a></th>
<th scope="col">Q3 2005</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
<th scope="col">Q4 2004 (yr/yr*)</th>
Yearly Totals*
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol">GDP</td>
<td>0.3</td>
<td>0.7</td>
<td>0.4</td>
<td>1.3</td>
<td>1.3</td>
<td>2.1</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Private Consumption</td>
<td>-0.2</td>
<td>0.5</td>
<td>0.3</td>
<td>0.8</td>
<td>1.3</td>
<td>1.5</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital Formation</td>
<td>0.8</td>
<td>1.1</td>
<td>1.0</td>
<td>2.2</td>
<td>2.1</td>
<td>2.3</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>0.5</td>
<td>3.4</td>
<td>2.0</td>
<td>4.6</td>
<td>3.8</td>
<td>6.5</td>
<td>1.1</td>
</tr>
<tr>
<td class="firstcol">-Imports</td>
<td>0.9</td>
<td>3.1</td>
<td>2.3</td>
<td>4.5</td>
<td>4.5</td>
<td>6.6</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body>
</html>

GDP growth in the Euro-Zone slowed in Q4 to 0.3% from 0.7% in Q3, according to the first full breakdown of Q4 data published this morning by Eurostat. These real growth rates are quoted in chained 2000 euros, adopted as the pricing [...]

Euro-zone Growth Eases to 0.3% in Q4

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

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Michael J. Moran

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As widely expected, energy prices surged in March, with the increase of 8.5% among the firmest in the history of the series. A reading in August 2023 was close (8.4%), and the increase in June 2022 was a touch firmer (8.9%). Only the June 2020 observation was decidedly stronger at 9.6%. (Data on the current version of the PPI begin in 2010.) The jump in energy prices pushed the headline index 0.5% higher, an uncomfortable reading but better than expectations in the market, which clustered in the range of 0.8% to 1.2%.

March represented the third consecutive month with a headline increase of 0.5%, and the advances in the prior two months were not entirely due to energy. Prices excluding food and energy also rose 0.5% in January and February (and December as well), which might stir thoughts of accelerating inflation.

However, pressure outside of energy cooled in March. Food prices fell 0.2% and prices excluding food and energy rose only 0.1%. Service prices, which rose an average of 0.6% in the prior three months, increased less than 0.1%. The modest changes outside of food and energy raised the prospect that an upward trend that seemed to be developing might now be fading. The March change, alone with a less-than-troubling increase in February, led to a downward tilt in the six-month moving average of core price changes (chart, below left).

All of the prices in the headline PPI and its components are final prices – that is, prices paid by the ultimate buyer of goods and services. For goods, the products involved will not undergo further processing. The full report on producer prices also includes price indexes for intermediate inputs. These indexes could provide clues on what might unfold for finished goods in months ahead. This obscure part of the PPI also offered a hint of encouragement.

Input prices for stage four production (i.e. the final stage of the production process) rose 0.5% in March. The increase, while hefty, was slower than the results in the prior two months and it stabilized the upward trend in the six-month average (chart, below right). The input price indexes should be interpreted cautiously because they tend to be more volatile than those for finished goods, but with broad-based cooling in March, this measure might have signal value in this instance.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

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- Energy prices surged in March, but most other items showed modest changes.
- Tame readings were a relief from hints of upward pressure in prior months.

March PPI: Tame Excluding Energy

Robert Brusca

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Japanese industrial production in February declined by 1.1%, led by a 2.1% drop in manufacturing output. By sector, consumer goods output fell by 0.3%, intermediate goods output fell by 2.1%, while investment goods output dropped by a strong 2.5%, all on a month-to-month basis. Mining sector output fell by 1.5% in February, while utilities output fell by 3.8%.

Sequentially, however, Japanese output had been accelerating, up by 0.1% over 12 months, at a 4.5% annual rate over six months, and at a 7% annual rate over three months.

**Manufacturing**
Manufacturing output is up at 0.3% over 12 months, at a 6.6% annual rate over six months, and by 11.7% annualized over three months.

Within manufacturing, consumer goods output is expanding at a strengthening pace, rising by 0.8% over 12 months, at a 4.8% annual rate over six months, and then at a 10.8% annual rate over three months. Intermediate goods output is flat over 12 months, rising at a 2.9% annual rate over six months, and at a 6.2% annual rate over three months. Investment goods output is up at a 7% annual rate over 12 months, at a 5.2% annual rate over six months, and at a 6% annual rate over three months. However, mining output is down year-over-year; output changes get progressively worse from 12 months to three months. Utilities show a 4.8% decline over 12 months, decline by 3.2% at an annual rate over six months, and then fall at a 4.7% annual rate drop over three months. Mining and utilities sectors are experiencing more in the way of contracting effects.

**Quarter-to-date**
Reported on a quarter-to-date basis (two months into Q1), total industry output is up at a 7.3% annual rate, with manufacturing up at a 15.2% annual rate on the same basis. For sectors, however, the strength is in consumer goods and investment goods where output is increasing at an 11.9% annual rate in the quarter; intermediate goods output is up at a 9.3% annual rate quarter-to-date. Mining output shows a decline at an annual rate in the quarter-to-date, while utilities output posts an increase.

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**The trends are good...but**
The trend data provide an upbeat assessment for Japanese output despite the setback in February. However, we know this isn't going to last. The global economy has run into a buzz-saw since then. Global PMI survey data took a sizable step back in March as the war with Iran began, and with oil prices spiking, all past trends are basically off the books, and we have to recalibrate everything. What we can see is that the Japanese economy was on a run and was doing better. It was beginning to make inroads before the Iran war took place.

Japan has a history of locking up oil supplies long in advance, so the economy may continue to have more resiliency to oil prices than other economies and compared to what people expect. On the other hand, if Japan has contracts to supply oil at a price and supplies cannot get out of the Middle East, those contracts may not count for much. However, there still are going to be perceptions and expectations for the future and concerns about what's going to happen to global demand—nobody is out of the woods yet. For now, trend-based data in Japan look extremely good; however, we know not to believe it will last. At this point, we're not sure what to expect next, except something that will be much worse.

Japan

Japan’s IP: A Step Back in February

Winnie Tapasanun

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Existing home sales fell 3.6% m/m (-1.0% y/y) to 3.98 million units (SAAR) in March, the lowest level since June 2025, following a 2.7% rebound to 4.13 million in February (previously +1.7%; 4.09 mil.), according to the National Association of Realtors (NAR). The Action Economics Forecast Survey had expected March sales of 4.08 million units. Sales remained 38.1% below a high of 6.43 million in January 2022 and 39.7% below a peak of 6.60 million in January 2021. The March fall coincided with an increase in the average 30-year fixed mortgage rate to a three-month-high 6.18% in March after declining to 6.05% in February, according to Freddie Mac. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales fell 3.5% (-0.3% y/y) to 3.63 million units in March, the second m/m fall in three months and the weakest reading since June 2025, after a 3.3% increase to 3.76 million in February. Sales of condos and co-ops slid 5.4% (-7.9% y/y) to 350,000, the fourth m/m slide in five months and the lowest level since May 2020, on top of a 2.6% February fall to 370,000.

By region, March existing home sales declined m/m across all major regions. Sales in the Northeast dropped 8.5% (-12.2% y/y) to 430,000 in March after a 6.0% decrease in February, marking the third consecutive m/m fall and a record low. Sales in the Midwest fell 4.2% (-3.2% y/y) to 920,000, the lowest reading since September 2024, reversing a 3.2% February increase. Sales in the South slid 3.1% (+2.2% y/y) to 1.86 million after a 3.2% February rise. Sales in the West fell 1.3% (+1.3% y/y) to 770,000 following a 6.8% February rebound. The Midwest, South, and West each posted the second m/m decline in three months. Notably, the South remained the dominant region, accounting for 46.7% of total U.S. existing home sales.

The median price of all existing homes (NSA) rose 2.7% (1.4% y/y) to $408,800 in March, the highest since November, following a 0.8% increase to $398,000 in February (unrevised) and three successive m/m declines. Prices were 5.5% below a high of $432,700 in June 2025 but 13.3% above a low of $360,800 in January 2023. The median price of an existing single-family home grew 2.5% (1.3% y/y) to $412,400 in March, the highest since November, after a 1.0% rebound to $402,300 in February. The median price of condos and co-ops, up for the third time in four months, climbed 4.8% (2.3% y/y) to $371,500, the highest since June 2025, following a 2.9% February drop to $354,400. Regionally, overall prices rose m/m in March in the Midwest (+3.8%; +4.9% y/y), Northeast (+3.5%; +5.7% y/y), West (+2.7%; -1.3% y/y), and South (+1.7%; +0.8% y/y).

Inventories of homes for sale increased for the third consecutive in March. The number of existing homes for sale (NSA) rose 3.0% (2.3% y/y) to 1.36 million units, the highest level since November, following a 4.8% February rise to 1.32 million. The supply of homes on the market at the current selling rate (NSA) rose to 4.1 months, the highest in four months, after holding at 3.8 months in February and January. The recent high of 4.6 months was in August 2025, while a record low in supply of 1.6 months was in January 2022.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

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- March sales -3.6% m/m to lower-than-expected 3.98 mil.; -1.0% y/y, fifth straight y/y decrease.
- Broad-based regional m/m declines: Northeast (-8.5%), Midwest (-4.2%), South (-3.1%), West (-1.3%); y/y sales up in the South and West but down in the Northeast and Midwest.
- Median sales price +2.7% (+1.4% y/y) to $408,800, highest since November.
- Unsold inventory +3.0% (+2.3% y/y) to four-month-high 1.36 mil. units; 4.1 months' supply.

U.S. Existing Home Sales Drop in March to a Nine-Month Low

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As the chart makes clear, Dutch exports and imports are driven by very complementary forces and tend to track one another closely. Both flows boomed when COVID ended, slowed to a contraction in 2023, and then recovered to maintain steady levels (growth rates that hugged a zero-percent growth rate) from mid-2024 to late-2025. Recently, exports and imports have begun to weaken, with both flows showing contraction over 12 months. Goods imports are falling at a 5.5% pace as exports are falling at a 4% pace. 

As for intra-year trends, the sequential growth rates show exports have transitioned into a progressively more contractive mode, while imports have declined over 12 months, six months, and three months, but without a clear signal on whether the trend is getting better or worse.

Of course, the trade flow depends on price trends and economic trends; both are under strain and uncertainty.

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The S&P Global PMIs had been tracing improvement through February, but their March values showed a broad weakening globally. We have yet to see the March number for Dutch trade in that window, but it’s coming, and we should brace for things to get worse. Oil prices, of course, will be rising sharply, and there are concerns about the knock-on effects of higher oil prices on activity. Already there are supply chain disruptions for goods other than oil, with fertilizers and helium frequently cited. It is the planting season for farms, and fertilizer is in strong demand. Helium is an input into the chip-making process, and a shortage is not good for the tech sector. The largest hub producing helium is in Qatar, and it has been shuttered since the war in Iran began.

If the closure of the Strait of Hormuz drags on—and the newest development is that the U.S. has put an embargo on that passage—we will have to see what other shortages develop and how bad the oil shortage becomes. It is a difficult time; it comes during a period in which central banks have largely been missing their inflation targets, leaving them less flexibility to deal with shortages and fallout.  The Bank of England and the European Central Bank have put markets on notice that, if the Iran conflict drags on, at their next meeting rate hikes are quite possible. In the U.S., the Fed has given markets no guidance.

So far, the Baltic dry index has held up and does not show any clear evidence of global trade slowing. But that is something else to watch for. In economics, there is an expression about how things happen. And it says: first things take longer than you expect to occur, and then they progress at pace much faster than expected. There may not be a good warning period if these conditions worsen.

Netherlands

Dutch Trade Trends Improve Goods Balance—for Now

Tian Yong Woon

In this week’s Letter, we continue to track developments in the Middle East and their implications for Asia. While the recent US–Iran ceasefire initially provided some relief to markets, subsequent complications have kept uncertainty elevated, with no conclusive resumption of trade flows yet through the Strait of Hormuz (chart 1)—flows that are critical to restoring the global energy system to more normal conditions.

Overall, our Blue Chip Economic Indicators panellists have broadly downgraded growth expectations for Asia this year, with the exceptions of China and Taiwan, while inflation forecasts have been revised higher across the board (chart 2). That said, the growth and inflation impact from the conflict are largely viewed as transitory, with most panellists expecting them to last between six and twelve months (chart 3). Nonetheless, central banks in the region appear increasingly reluctant to ease policy further. This is evident in the latest round of decisions, where India, South Korea, and New Zealand all held policy rates steady (chart 4), citing heightened uncertainty stemming from the ongoing conflict.

While inflationary pressures are beginning to build more broadly across the region, China had already been experiencing a pickup in recent months (chart 5). This has been supported by easing producer price deflation and improving industrial profits, alongside policy efforts to curb excessive price competition among producers. Attention now turns to China’s upcoming Q1 GDP release and the full slate of monthly data due later this week (chart 6).

**Middle east conflict developments**
Crude oil prices fell sharply earlier last week following news of a temporary US–Iran ceasefire. That said, the geopolitical backdrop remains highly fragile, as reflected in continued rhetoric from both sides, alongside the US announcement of a naval blockade over the strait after talks failed to yield an agreement. Compounding this, Iran has indicated that it cannot fully reopen the strait, citing uncertainty over the location of sea mines it had previously laid—further complicating any swift normalization of oil flows. Even prior to these latest developments, IMF-tracked shipping volumes had only begun to show tentative signs of recovery and remain well below pre-escalation levels. As such, while the ceasefire provides a welcome reprieve, meaningful economic relief will hinge on a sustained restoration of oil flows—crucially without additional frictions or costs that could impair global trade. Until then, crude prices are likely to remain elevated, albeit possibly off recent highs, weighing on growth while sustaining inflationary pressures. In Asia, where many economies are heavily reliant on oil imports, the region is likely to bear a disproportionate share of these effects.

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**The latest Blue Chip Economic Indicators survey**
In light of recent developments, our latest Blue Chip Economic Indicators (BCEI) survey provides a timely update. It is a monthly poll of forecasters covering key economic indicators across a wide range of economies. As shown in chart 2, panellists have generally trimmed their 2026 growth forecasts across most Asian economies. Taiwan is a notable exception, with growth expectations revised higher, likely continuing to be supported by the ongoing AI-driven expansion. Meanwhile, forecasts for China’s 2026 growth were left unchanged. On the inflation front, expectations for 2026 have been revised higher across all Asian economies, consistent with the pass-through from the recent surge in oil prices. The largest upward revision was seen in Australia (+0.7 ppts), while increases were more modest in economies such as Japan and China (+0.3 ppts each).

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Digging deeper into this month’s BCEI survey, the special questions provide additional insight into panellists’ views. In particular, one question asked about the time horizon over which current energy supply chain disruptions are expected to materially affect global inflation and growth. Panellists largely view the impact as short term (chart 3), with most clustering around a six- to twelve-month window. Smaller shares see effects lasting either less than six months or extending between one and three years, while only a very small minority expect disruptions to persist beyond three years. Overall, while the recent oil price surge represents a clear shock to the global economy, it is widely seen as transitory—temporarily lifting inflation and weighing modestly on growth, but unlikely to drive a fundamental shift in the broader macroeconomic outlook.

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**The week’s central bank decisions**
Turning to last week’s key monetary policy decisions in the region, the central banks of India (RBI), South Korea (BoK), and New Zealand (RBNZ) all kept policy rates unchanged, with several common threads across their communications. Notably, each highlighted the considerable uncertainty stemming from the Middle East conflict, which has already begun to feed into global inflation via higher oil prices. This aligns with broader investor sentiment: the bar for further policy easing has risen given renewed inflationary pressures, while the threshold for a shift toward tightening remains high, as most economies are still far from overheating. On central bank–specific nuances, the RBI emphasized the delicate trade-off between anchoring inflation expectations and minimizing growth sacrifices. The BoK noted that its policy rate is around the neutral level, while flagging potential additional pressure on the won from elevated oil prices. Meanwhile, the RBNZ signalled that near-term inflation is likely to rise even as the economic recovery softens, citing significant supply chain disruptions linked to the Middle East conflict.

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**China and the week ahead**
Lastly, we turn to China and the week ahead. As shown in chart 5, even prior to the Middle East conflict, China had already begun to see a pickup in inflation—an early indication that it may be moving out of its prolonged period of chronically low, or even negative, price pressures. This recent firming in CPI inflation has been accompanied by more sustained growth in industrial profits and a steady improvement in producer price pressures, with PPI inflation recently turning positive after a multi-year stretch of deflation. Together, these trends point to gradually strengthening price dynamics. The shift in inflation also reflects underlying policy efforts to curb excessive price competition among producers, which had weighed on prices for an extended period. Looking ahead, the recent oil price shock could provide an additional boost to inflation, as higher energy costs begin to feed through into future readings.

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Looking ahead to the coming week, Asia faces a packed data calendar, with the spotlight firmly on China as its Q1 GDP release and the usual slate of monthly indicators are due (chart 6). A key focus will be how March data shapes overall Q1 growth, particularly given that activity in the first two months of the year largely surprised to the upside. Investors will also be watching for any early signs of spillovers from the Middle East conflict in the March prints. Retail sales will be closely monitored as a gauge of the effectiveness of policy support for consumption, while developments in house prices will remain in focus as the property downturn continues to unfold gradually.

Economy in Brief

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