Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510b.jpg" width="353">
Chain store sales opened the month of May with a 0.7% rise which added to the 0.5% increase of the prior week, according to the International Council of Shopping Centers (ICSC)-UBS survey. The increase raised the level of sales 1.4% versus April when they rose 0.6% from March.
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC fell 0.4% (-1.2% y/y) during the final week of April.
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">05/07/05</th>
<th scope="col">04/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>461.4</td>
<td>458.0</td>
<td>3.5%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
Gasoline Prices Ease 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 10, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510a.jpg" width="353">
In the US, the average price for unleaded regular gasoline eased to $2.19 per gallon last week, down for the fourth consecutive week and off 4.1% from the peak of $2.28.
As of March, the price of gasoline had risen 83.3% versus the low in late 2001. Relative to non-energy prices in the CPI, gasoline prices rose 72.0% during the period.
Mitigating the economic impact of these gains is the 50% decline in the ratio of petroleum usage versus US real GDP during the last thirty years.
The price of oil also fell last week. West Texas Intermediate crude dropped to $52.04 per barrel versus the earlier high of $57.28.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510e.jpg" width="353">
Wholesale natural gas prices slipped to $6.56/mmbtu (+8.8% y/y), down 8.5% from the April average.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">05/09/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.19</td>
<td>$1.79</td>
<td>12.6%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$52.04</td>
<td>$41.78</td>
<td>33.7%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
Balance of German Trade in Goods Reached New Peak in March 
by <a href="/comment/Curley.html">Louise Curley</a> May 10, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510f.jpg" width="353">
German exports, seasonally adjusted, rose 2.1%, in March after having declined by almost 3% in February. At the same time imports declined 1.2%. As a result, the balance of trade rose by 2.9 billion euros to 15.1 billion euros, an all time peak. Chart 1 shows Germany&#39;s balance of trade in goods.
The improvement in the balance of trade in goods has favorable implications for growth in the economy. Exports have been the one bright spot in the German economy and have accounted for most of what little growth the economy has shown. Imports, of course, affect GDP negatively, and the rising cost of oil has muted the positive influence of exports. Chart 2 shows the effect of rising oil prices over the last year on Germany&#39;s imports of crude oil and gas imports. While the imports of crude oil and gas have dropped in the first two months of this year, the price of oil remains a risk to the outlook.
In the table below we show both the seasonally adjusted and the non seasonally adjusted data. Strictly speaking, the percentage change from one period to the next should be calculated on the basis of seasonally adjusted data. In the absence of seasonal adjustments, the most meaningful percentage change is that of one period to the same period in the previous year. In its press release the Federal Statistical Office of Germany reports percentage changes in this manner.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510g.jpg" width="353">

<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/GERMANY.HTM">Germany</a></th>
<th scope="col">Mar 05</th>
<th scope="col">Feb&nbsp; 05</th>
<th scope="col">Mar 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports (SA Bil Euros)</td>
<td>62.7</td>
<td>61.5</td>
<td>59.0</td>
<td>2.1</td>
<td>&nbsp;</td>
<td>725.5</td>
<td>666.9</td>
<td>654.5</td>
</tr>
<tr>
<td class="firstcol">Imports (SA Bil Euros)</td>
<td>47.9</td>
<td>48.24</td>
<td>44.62</td>
<td>-1.2</td>
<td>&nbsp;</td>
<td>570.3</td>
<td>535.9</td>
<td>520.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance (SA Bil Euros)</td>
<td>15.1</td>
<td>13.2</td>
<td>14.4</td>
<td>1.9</td>
<td>&nbsp;</td>
<td>155.2</td>
<td>131.01</td>
<td>134.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports (NSA Bil Euros)</td>
<td>65.3</td>
<td>59.7</td>
<td>64.7</td>
<td>&nbsp;</td>
<td>0.9</td>
<td>733.2</td>
<td>664.43</td>
<td>651.32</td>
</tr>
<tr>
<td class="firstcol">Imports (NSA Bil Euros)</td>
<td>49.0</td>
<td>46.2</td>
<td>48.1</td>
<td>&nbsp;</td>
<td>1.9</td>
<td>577.1</td>
<td>534.5</td>
<td>518.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance (NSA Bil Euros)</td>
<td>16.3</td>
<td>13.5</td>
<td>16.6</td>
<td>&nbsp;</td>
<td>-3.0</td>
<td>156.1</td>
<td>130.0</td>
<td>132.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales opened the month of May with a 0.7% rise which added to the 0.5% increase of the prior week, according to the International Council of Shopping Centers (ICSC)-UBS survey. The increase raised the level of sales 1.4% [...]

Weekly Chain Store Sales Up Again

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510c.jpg" width="353">
March Industrial production data were released today for the developed nations-- Germany, Denmark, the United Kingdom; and for the developing nations--Slovakia, Turkey and Malaysia. Each country reported a decline in production from February, adding to the evidence of a slow down in world growth in the first quarter of 2005.
While Turkey showed the largest decline, it followed an unusually large-- 9%-- rise in February. Unexpected declines occurred in the United Kingdom where production was down by 1.14% and in Germany where production declined by 0.79%. In both cases the consensus had predicted a rise.
The year-to-year percentage changes in the data generally show a declining trend over the past year or so in all the reporting countries except Germany, where the data appear trend less. The first chart compares the year-to-year changes in production for Germany and the United Kingdom. Although Turkey and Malaysia show a declining trend in year-to-year changes, the percent changes have yet to record declines, indicating that production is still increasing on a year-to-year basis as shown in the second chart. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510d.jpg" width="353"> The same cannot be said for Denmark where the average year-to-year decline for the first quarter was 3.88% and for Slovakia where there has been little change in the level of production.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INDUSTRIAL&nbsp; PRODUCTION</th>
<th scope="col">Mar 05</th>
<th scope="col">Feb 05</th>
<th scope="col">Mar 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany (2000=1000</td>
<td>100.9</td>
<td>101.7</td>
<td>99.3</td>
<td>-0.79</td>
<td>1.61</td>
<td>100.8</td>
<td>98.4</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">U. K. (2001=100)</td>
<td>95.8</td>
<td>96.9</td>
<td>97.6</td>
<td>-1.14</td>
<td>-4.84</td>
<td>97.8</td>
<td>97.3</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Denmark (2000=100)</td>
<td>97</td>
<td>99</td>
<td>103</td>
<td>-2.02</td>
<td>-5.83</td>
<td>102</td>
<td>102</td>
<td>103</td>
</tr>
<tr>
<td class="firstcol">Turkey (1997=100)</td>
<td>129.0</td>
<td>137.0</td>
<td>122.7</td>
<td>-5.84</td>
<td>5.13</td>
<td>123.4</td>
<td>112.4</td>
<td>103.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovakia (2000=100)</td>
<td>124.1</td>
<td>126.7</td>
<td>127.9</td>
<td>-2.05</td>
<td>-2.97</td>
<td>124.7</td>
<td>120.9</td>
<td>114.8</td>
</tr>
<tr>
<td class="firstcol">Malaysia (1993=100)</td>
<td>237.5</td>
<td>240.3</td>
<td>226.0</td>
<td>-1.17</td>
<td>5.09</td>
<td>229.6</td>
<td>206.3</td>
<td>188.8</td>
</tr>
</tbody>
</table>
</body>
</html>

March Industrial production data were released today for the developed nations-- Germany, Denmark, the United Kingdom; and for the developing nations--Slovakia, Turkey and Malaysia. Each country reported a decline in production from [...]

March Industrial Production Data Show Declines in Developed and Emerging Nations

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050509a.jpg" width="353">
The Weekly Leading Index of the US economy from the Economic Cycle Research Institute (ECRI) fell 0.2% in the latest period and it was the fifth decline since mid-March. The six month growth rate of 3.0% continued to signal economic expansion though it was down from the recent high of 3.9%.
Higher claims for jobless insurance and weaker commodity prices contributed to the index&#39;s decline offset somewhat by a rise in mortgage applications and lower interest rates.
During the last ten years there has been a 69% correlation between six-month growth in the ECRI leading index and two quarter growth in real U.S. GDP.
The components of the ECRI weekly leading index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The ECRI Leading Index&#39;s recent pattern generally mirrors the Conference Board&#39;s Index of Leading Economic Indicators, with a slight lead. Construction of the ECRI Leading Index differs from the Conference Board Index but there has been a 70% correlation between the y/y percent change in the two series over the last 10 years.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months.
The latest from ECRI is available <a href="http://www.businesscycle.com/">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/@W8/@W801/@W801.HTM">ECRI Leading Index</a></th>
<th scope="col">04/29/05</th>
<th scope="col">04/22/05</th>
<th scope="col">Growth Rate</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Weekly</td>
<td>134.4</td>
<td>134.7</td>
<td>3.0%</td>
<td>4.2%</td>
<td>6.6%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>April</td>
<td>Mar</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Monthly</td>
<td>134.9</td>
<td>135.4</td>
<td>3.3%</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

The Weekly Leading Index of the US economy from the Economic Cycle Research Institute (ECRI) fell 0.2% in the latest period and it was the fifth decline since mid-March. The six month growth rate of 3.0% continued to signal economic [...]

ECRI Leaders' Forward Momentum Down

Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050506d.jpg" width="353">
The Canadian economy also experienced job growth in April, with a total employment gain of 29,300, following a slim 4,400 rise in March. The great part of the April move was in service industries, as the number of workers in the goods sector held just about steady. From a year ago, employment increased 1.4%, indicating some slowing after a 2% average annualized rate of increase over the past three years.
In the goods sectors, April&#39;s flat result was the net of a nearly offsetting rise in construction jobs and fall in manufacturing. These same two have maintained this kind of pattern over the last year as well. In service industries, firm uptrends are evident in trade, finance, professional services and education. Transportation, health care and accommodations and food service are losing jobs, although the declines in the latter two are quite modest. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050506c.jpg" width="353">
The unemployment rate in Canada has continued its declining trend begun in late 2003. The 6.8% in April is the lowest since the same level in December 2000. While this might suggest recent strength in the Canadian labor market, optimism must be tempered by the fact that employment growth has been slower. In fact, the inroads on the reported unemployment rate come from lower labor force participation. While employers are adding new jobs at a slower pace, people are pulling back somewhat from wanting jobs in the first place. This is reflected in the reduction in the participation rate by 0.4% from its 2004 average of 78.2% of the working-age population to 77.8% in April. Had participation remained at that level, calculations indicate that the labor force would have been nearly 80,000 larger in April and the resulting unemployment rate would not have declined.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CANSIM/CANSIM.HTM">Canada</a></th>
Mo/Mo Change, 000s
<th scope="col">Yr/Yr % Apr 2005 </th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Apr 2005</td>
<td>Mar 2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Employment*</td>
<td>29.3</td>
<td>4.4</td>
<td>1.4%</td>
<td>1.5%</td>
<td>1.9%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods - Producing* </td>
<td>0.4</td>
<td>10.8</td>
<td>0.7%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>6.3%</td>
</tr>
<tr>
<td class="firstcol">Service - Producing*</td>
<td>28.9</td>
<td>-6.3</td>
<td>1.5%</td>
<td>1.2%</td>
<td>2.6%</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Labor Force**</td>
<td>-5.6</td>
<td>-8.2</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate**</td>
<td>6.8%</td>
<td>7.0%</td>
<td>Apr 2004</td>
<td colspan="3">Annual Average</td>
</tr>
<tr class="odd">
<td class="firstcol">7.3%</td>
<td>7.2%</td>
<td>7.7%</td>
<td>7.7%</td>
</tr>
<tr>
<td class="firstcol">Participation Rate**</td>
<td>77.8%</td>
<td>78.0%</td>
<td>78.3%</td>
<td>78.2%</td>
<td>78.1%</td>
<td>77.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Canadian economy also experienced job growth in April, with a total employment gain of 29,300, following a slim 4,400 rise in March. The great part of the April move was in service industries, as the number of workers in the goods [...]

Some Employment Gains in Canada, But Lower Unemployment Reflects Reduced Participation

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050506a.jpg" width="353">
April non-farm payrolls rose 274,000 following an upwardly revised 146,000 increase a month earlier. Consensus expectations had been for a 175,000 rise. The latest increase pulled the average three month change in payrolls (240,000) to its highest in nearly a year.
The household survey also indicated that the labor market remained firm as the unemployment rate held at a low 5.2%. Employment rose 598,000 (1.8% y/y) and the labor force rose 605,000 (1.3% y/y) as the participation rate rose to 66.0%, its highest this year. The number of job losers fell sharply for the fourth straight month (-15.0% y/y) due to a 21.1% decline in the number of permanent job losers versus last year.
Private service producing payrolls rose 211,000 (2.0% y/y) last month and gains were spread across industries. Total government employment rose 18,000 (0.7% y/y) but federal government jobs fell again (-1.1% y/y). Factory sector payrolls fell 6,000 for the third monthly decline this year though the breadth of hiring gain improved slightly to 50%. Six-month breadth remained low at 38.7%.
Construction jobs rose a firm 47,000 (4.3% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050506b.jpg" width="353">
The index of aggregate hours worked (employment times hours worked) rose 0.9% (3.1% y/y) helped higher by a jump in the length of the workweek to its highest since 2002. The level of hours worked began the quarter 4.4% (AR) ahead of 1Q05.
Average hourly earnings increased 0.3% for the second month and earnings in manufacturing recovered all of the prior month&#39;s 0.2% decline (2.3% y/y).
Evidence of Wage Inequality, Worker Education, and Technology from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/05/05/Wheeler.pdf"> here</a>.
A corrected FOMC Statement is available <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2005/20050503/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/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>274,000</td>
<td>146,000</td>
<td>1.7%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-6,000</td>
<td>-7,000</td>
<td>-0.1%</td>
<td>-1.2%</td>
<td>-4.9%</td>
<td>-7.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.9</td>
<td>33.7</td>
<td>33.7</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.7%</td>
<td>2.1%</td>
<td>2.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.2%</td>
<td>5.2%</td>
<td>5.5%</td>
<td>5.5%</td>
<td>6.0%</td>
<td>5.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

April non-farm payrolls rose 274,000 following an upwardly revised 146,000 increase a month earlier. Consensus expectations had been for a 175,000 rise. The latest increase pulled the average three month change in payrolls (240,000) [...]

U.S. Payrolls Firm

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050506a.jpg" width="353">
April non-farm payrolls rose 274,000 following an upwardly revised 146,000 increase a month earlier. Consensus expectations had been for a 175,000 rise. The latest increase pulled the average three month change in payrolls (240,000) to its highest in nearly a year.
The household survey also indicated that the labor market remained firm as the unemployment rate held at a low 5.2%. Employment rose 598,000 (1.8% y/y) and the labor force rose 605,000 (1.3% y/y) as the participation rate rose to 66.0%, its highest this year. The number of job losers fell sharply for the fourth straight month (-15.0% y/y) due to a 21.1% decline in the number of permanent job losers versus last year.
Private service producing payrolls rose 211,000 (2.0% y/y) last month and gains were spread across industries. Total government employment rose 18,000 (0.7% y/y) but federal government jobs fell again (-1.1% y/y). Factory sector payrolls fell 6,000 for the third monthly decline this year though the breadth of hiring gain improved slightly to 50%. Six-month breadth remained low at 38.7%.
Construction jobs rose a firm 47,000 (4.3% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050506b.jpg" width="353">
The index of aggregate hours worked (employment times hours worked) rose 0.9% (3.1% y/y) helped higher by a jump in the length of the workweek to its highest since 2002. The level of hours worked began the quarter 4.4% (AR) ahead of 1Q05.
Average hourly earnings increased 0.3% for the second month and earnings in manufacturing recovered all of the prior month&#39;s 0.2% decline (2.3% y/y).
Evidence of Wage Inequality, Worker Education, and Technology from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/05/05/Wheeler.pdf"> here</a>.
A corrected FOMC Statement is available <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2005/20050503/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/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>274,000</td>
<td>146,000</td>
<td>1.7%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-6,000</td>
<td>-7,000</td>
<td>-0.1%</td>
<td>-1.2%</td>
<td>-4.9%</td>
<td>-7.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.9</td>
<td>33.7</td>
<td>33.7</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.7%</td>
<td>2.1%</td>
<td>2.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.2%</td>
<td>5.2%</td>
<td>5.5%</td>
<td>5.5%</td>
<td>6.0%</td>
<td>5.8%</td>
</tr>
</tbody>
</table>
Some Employment Gains in Canada, But Lower Unemployment Reflects Reduced Participation 
by <a href="/comment/Stone.html">Carol Stone</a> May 6, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050506c.jpg" width="353">
The Canadian economy also experienced job growth in April, with a total employment gain of 29,300, following a slim 4,400 rise in March. The great part of the April move was in service industries, as the number of workers in the goods sector held just about steady. From a year ago, employment increased 1.4%, indicating some slowing after a 2% average annualized rate of increase over the past three years.
In the goods sectors, April&#39;s flat result was the net of a nearly offsetting rise in construction jobs and fall in manufacturing. These same two have maintained this kind of pattern over the last year as well. In service industries, firm uptrends are evident in trade, finance, professional services and education. Transportation, health care and accommodations and food service are losing jobs, although the declines in the latter two are quite modest. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050506d.jpg" width="353">
The unemployment rate in Canada has continued its declining trend begun in late 2003. The 6.8% in April is the lowest since the same level in December 2000. While this might suggest recent strength in the Canadian labor market, optimism must be tempered by the fact that employment growth has been slower. In fact, the inroads on the reported unemployment rate come from lower labor force participation. While employers are adding new jobs at a slower pace, people are pulling back somewhat from wanting jobs in the first place. This is reflected in the reduction in the participation rate by 0.4% from its 2004 average of 78.2% of the working-age population to 77.8% in April. Had participation remained at that level, calculations indicate that the labor force would have been nearly 80,000 larger in April and the resulting unemployment rate would not have declined.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CANSIM/CANSIM.HTM">Canada</a></th>
Mo/Mo Change, 000s
<th scope="col">Yr/Yr % Apr 2005 </th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Apr 2005</td>
<td>Mar 2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Employment*</td>
<td>29.3</td>
<td>4.4</td>
<td>1.4%</td>
<td>1.5%</td>
<td>1.9%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods - Producing* </td>
<td>0.4</td>
<td>10.8</td>
<td>0.7%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>6.3%</td>
</tr>
<tr>
<td class="firstcol">Service - Producing*</td>
<td>28.9</td>
<td>-6.3</td>
<td>1.5%</td>
<td>1.2%</td>
<td>2.6%</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Labor Force**</td>
<td>-5.6</td>
<td>-8.2</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate**</td>
<td>6.8%</td>
<td>7.0%</td>
<td>Apr 2004</td>
<td colspan="3">Annual Average</td>
</tr>
<tr class="odd">
<td class="firstcol">7.3%</td>
<td>7.2%</td>
<td>7.7%</td>
<td>7.7%</td>
</tr>
<tr>
<td class="firstcol">Participation Rate**</td>
<td>77.8%</td>
<td>78.0%</td>
<td>78.3%</td>
<td>78.2%</td>
<td>78.1%</td>
<td>77.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050505e.jpg" width="353">
The Australian trade deficit widened distinctly in March. The A$2.7 billion gap, reported today by the Australian Bureau of Statistics, is the second largest monthly shortfall ever. In this latest month, both exports and imports moved adversely, with exports down 1.5% and imports up 3.3% from February.
At the same time, longer comparisons suggest that March&#39;s trade deficit widening, and the dip in exports in particular, is perhaps not representative of current trends. Exports, in fact, have expanded 12.4% over the past year, encompassing a 17.6% advance in &quot;non-rural goods&quot; shipments. These products appear quite vigorous, recovering markedly from a decline during 2003. Agricultural items, in contrast, have undergone extraordinarily wide cycles in the last several years, and have become less reliable as a prop to the Australian economy.
Imports, as in many countries, are being impacted by the rising cost of energy products, reflected here in the &quot;intermediate goods&quot; line item. Consumers continue to buy foreign products, while demand for capital goods from abroad is beginning to show signs of hesitation. This latter is notable, for, as seen in the second graph, imports of capital goods closely parallel the national accounts measure of investment in machinery and equipment. So the downturn in these imports in the opening months of 2005 may suggest slower investment demand in general in Australia.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050505d.jpg" width="353">

<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/ANZ/@A1/@A1.HTM">Australia</a></th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Balance on Goods &amp; Services </td>
<td>-2,672</td>
<td>-2,238</td>
<td>-2,098</td>
<td>-25,434</td>
<td>-23,749</td>
<td>-10,325</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports of Goods</td>
<td>10,151</td>
<td>10,302</td>
<td>8,870</td>
<td>118,427</td>
<td>108,321</td>
<td>119,478</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rural Goods</td>
<td>1,904</td>
<td>2,075</td>
<td>2,003</td>
<td>26,925</td>
<td>22,357</td>
<td>28,866</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-rural Goods</td>
<td>8,247</td>
<td>8,227</td>
<td>6,867</td>
<td>91,502</td>
<td>85,967</td>
<td>90,612</td>
</tr>
<tr>
<td class="firstcol">Imports of Goods</td>
<td>12,910</td>
<td>12,501</td>
<td>10,921</td>
<td>142,739</td>
<td>131,656</td>
<td>129,468</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>4,070</td>
<td>4,054</td>
<td>3,579</td>
<td>45,304</td>
<td>41,397</td>
<td>39,931</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital Goods</td>
<td>2,838</td>
<td>2,949</td>
<td>2,599</td>
<td>34,417</td>
<td>31,032</td>
<td>303,79</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate &amp; Other Goods</td>
<td>6,002</td>
<td>5,499</td>
<td>4,743</td>
<td>63,018</td>
<td>59,227</td>
<td>59,158</td>
</tr>
</tbody>
</table>
</body>
</html>

The Australian trade deficit widened distinctly in March. The A$2.7 billion gap, reported today by the Australian Bureau of Statistics, is the second largest monthly shortfall ever. In this latest month, both exports and imports moved [...]

Australian Trade Deficit Wider in March

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

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Michael J. Moran

260403A.jpg

260403B.jpg

The report on payroll employment for March was impressive when viewed in isolation. Job growth was strong at 178,000, and the advance was broadly based. The construction and manufacturing sectors both posted solid gains, and the service-producing sector registered its firmest performance in more than a year. However, the gain might be viewed as a continuation of an unusual bout of random volatility. The March advance followed a notable drop in February (-133,000, revised down from -92,000), which followed an upside surprise in January (160,000, revised up from 126,000).

To be sure, statistical noise has been a factor in the past three months, but the results also represent an encouraging shift in job growth from that in the second half of last year, when employment rose only marginally in the third quarter and fell in the fourth. The net change in the past three months seems to signal that job growth is not drying up. The net advance so far this year is far from brisk, but it is clearly in the plus column and noticeably better than results in late 2025.

The unemployment rate also might be viewed as favorable, as it dipped 0.1 percentage point to 4.3%, although it was a “soft” decline. That is, employment as measured by the household survey declined 64,000, but the size of the labor force fell by a larger amount (off 396,000). Still, the jobless rate has climbed only modestly higher since the labor market started to ease in 2023, and it has inched lower in the past few months.

Unemployment has been contained despite modest hiring because layoffs also have been light. Initial claims for unemployment benefits have moved sideways in the past few years, indicating no change in the pace of layoffs. This pattern is confirmed by terminations data in the report on job openings and labor turnover (JOLTs) from the Bureau of Labor Statistics.

A supply-side shift in the labor market also has helped to contain the unemployment rate. Growth in the size of the labor force has slowed, and with fewer individuals seeking employment, those searching are more easily absorbed. Measures of the size of the labor force can be difficult to assess because there are breaks in the series every year. The Bureau of Labor Statistics adjusts the population controls used in its estimating procedure every January without revising past data to align with the new estimates. Thus, every January involves a discontinuity in the series, which will distort year-over-year changes.

However, Haver Analytics maintains a smoothed series originally developed by BLS to eliminate the breaks in the labor force data. As shown in the chart below, the smoothed series on the size of the labor force had been growing at a pace centered on 1.2% through 2022, but it has slowed irregularly since then (an observation for October is not available because of limited data collection during the government shutdown). The overall labor force is still growing, but the slower pace means fewer individuals looking for work, which most likely results in fewer being counted as unemployed.

The BLS collects data every month on both native-born and foreign-born individuals in the labor force. The breaks in these series are an issue, and Haver does not maintain smoothed series. However, the use of moving averages achieves enough smoothing to provide a sense of underlying changes. The native-born labor force has moved erratically in the past couple of years, but it has continued to advance. The foreign-born labor force, in contrast, seems to have peaked in mid-2025 and has generally declined since then.

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

260403C.jpg

260403D.jpg

- The jump of 178,000 in payroll employment in March easily exceeded the expected gain of 51,000.
- Following a net gain in January and February, the employment setting seems to have brightened slightly.
- A dip in the unemployment rate continued the recent pattern of marginal changes.

Payroll Employment: Another Surprise in March, The Third Consecutive

Robert Brusca

260403E.jpg

French manufacturing industrial production was flat in February after a January rebound; output rose by 0.2% following a 0.8% decline in December.

The components of industrial production in February showed 2.6% increase in consumer durables, a 0.4% increase in consumer nondurables, flat output from capital goods, and a 0.7% month to month decline in intermediate output.

Sequentially, French output had been growing at a slow, steady pace of 0.8% at an annual rate over both 12 months and six months, but then slipped to a 6.1% contraction at an annual rate over three months. Consumer durable goods output on this span shows consistent increases, but there are no trends to clear acceleration or deceleration. Consumer nondurables trace an accelerating path of moderate means from -1.8% over 12 months, to -0.4% over six months, and then rising at a 5.5% annual rate over three months. Capital goods output is moving in the opposite direction, growing by 3.4% over 12 months, slowing to a 0.7% annual pace over six months, and then contracting at a 9.5% annual rate over three months. Intermediate goods output is falling at 0.8% pace over 12 months, but then it switches to an expansion rate of 0.8% over six months and 0.6% and over three months. There's nothing remarkable about these patterns, except there's some acceleration, some deceleration, and a lot of mulling about at low growth rates.

As a separate item, French auto production is slipping and decelerating, falling by 7.1% at an annual rate over 12 months, falling at a 7.9% pace over six months, and then plunging at a 19.3% annual rate over three months. On these same horizons, motor vehicle registrations fall by 14.7% over 12 months; the weakness pares back to an 11.2% annual rate decline over six months, and then it steps up to a 22.1% decline at an annual rate over three months. French demand for autos is not in good shape.

In the quarter to date—now two months into the first quarter—manufacturing industrial production is falling at a 0.8% annual rate. That pace is boosted by 9.4% annual rate gain in consumer durables output but restrained by just a 0.2% annual rate increase in consumer nondurable goods. Capital goods output is falling at a 1.9% annual rate, while intermediate goods output is falling at a 1% annual rate. Also in the quarter to date, automobile production is plunging at a 24.3% annual rate, while on the demand side, motor vehicle registrations are falling at a 15% annual rate.

French manufacturing data are somewhat confusing. The chart shows that the industrial production trend has been showing consistent increases over 12 months, but it has recently been pulling back relatively sharply. On the other hand, the manufacturing PMI for France has been consistently negative going back to mid-2022 and only in early 2026 has the manufacturing PMI been posting some values above the 50% mark, indicating that output was starting to actually expand. In March, the PMI reading for manufacturing has slipped back by the thinnest margin below the 50% mark.

260403.jpg

Of course, events in the Middle East make everything more speculative, with the war effectively closing the Strait of Hormuz and no certainty about how or when that is going to be sorted out. In the meantime, the potential threat of ongoing oil price pressures has put both the ECB and the Bank of England in a position to be more wary with policy, and they warned markets about the potential for rate hikes as soon as their next meetings are engaged. That also raises questions about the outlook for growth. But we continue to track and chronicle trends in the data. It's also quite clear that we could have events that will play out that could completely undermine these trends before they get a chance to run to conclusion. It's an important time to be wary and watch all developments—a lot is in play.

France

French IP Waffles

Kathleen Stephansen, CBE

260402A5.jpg

260402B5.jpg

Initial claims for unemployment insurance declined by 9,000 to 202,000 in the week ending March 28, from 211,000 in the week ending March 21, revised from 210,000. The four-week average declined 3,000 to 207,750 in the week ending March 28, from 210,750 the March 21 week, revised from 210,500. The Forecast Survey looked for 212,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 25,000 to 1.841 million in the week ending March 21, from 1.816 million in the week ending March 14. The four-week moving average declined to 1.839 million in the latest week from 1.846 million in the March 14 week. This is the lowest level for this average since September 28, 2024 when it was 1.834 million. The insured unemployment rate remained at 1.2% in the week of March 21. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending March 14, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.73%), Massachusetts (2.66%), Washington (2.39%), Minnesota (2.31%), California (2.17%), and New York (2.01%). The lowest rates were in Florida (0.31%), Louisiana (0.32%), Arkansas (0.36%), Alabama (0.38%), and North Carolina (0.40%). Rates in other notable states include Illinois (1.99%), Connecticut (1.82%), Pennsylvania (1.72%), and Texas (1.07%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

260402C5.jpg

260402D5.jpg

- New claims declined by 9,000 to 202,000.
- Continuing claims rose by 25,000 to 1.841 million.
- The insured unemployment rate remained at 1.2%.

U.S. Initial Unemployment Claims Edged Down in the Week of March 28

260402E.jpg

The S&P manufacturing PMIs for March showed improvements in 44.4% of the 18 reporters. The median reading for the month was at 50.9, indicating that expanding output was the median reading through the period. The median change showed a small step back of 0.1 diffusion points month-to-month.

Sequentially, looking at average yearly activity compared to a year ago, six months compared to 12 months, and three months compared to six months, we see progress in train. For three months compared to six months, the proportion of reporters showing improvement is 72.2%. For these reporters, over six months compared to 12 months, there is a 61.1% improvement proportion, while for 12 months compared to 12 months ago, there is only a 27.8% improvement.

The median reading over three months on average is 50.7, while the median reading over six months is 50.0 and the median reading over 12 months is 49.4. These readings show a very slow but steady improvement in manufacturing over this horizon.

In addition, we calculate the queue percentile standings for each reporter—that is, the level of the current diffusion index compared to all of the observations back to January 2022, expressing the final number as the percentile standing for the current month in that queue. On that basis, the median percentile standing for this group of reporters is 76.5%. It tells us that the median standing is in the top 25 percentile of all the readings since January 2022 to date. That's a reasonably good result. For the euro area, the queue percentile standing is at the 89.8 percentile, while for Germany it's at its 91.8 percentile. For the Monetary Union and for Germany, the current numbers are some of the best we've seen during this period. However, that doesn't mean that they're necessarily stellar readings.

**PMI diffusion vs. PMI rank standings**
German diffusion in manufacturing is 52.2 in March; for the EMU it is 51.6. Germany posts the fourth-highest PMI rank standing and the fifth highest raw standing in March. The highest standing among all reporters is 52.6 from South Korea. This is a period in which no country was posting very strong manufacturing results. In fact, the United States, with a manufacturing PMI rank standing of 79.6, has a diffusion reading in March just a tick below Germany’s whose queue standing at 91.8 seems miles ahead of the U.S.—but it isn’t. Remember that the queue standings are about relative positioning.

Looking at the details, we see that below-median rank readings were logged by Mexico, Russia, India, Brazil, Indonesia, and Turkey. The Asian markets and developing economies seem to have a harder time working up to the standards achieved by other countries.

We also have averages by certain groups of countries. For example, the U.S., the U.K., the Monetary Union, Canada, and Japan—an expanded G10 groping—had an average reading of 51.3 in March, and for that group of countries, the improvements have been steady from 12 months to six months to three months. For the BRIC countries in March, the average standing was 50.4, and for that group there has been a very slight ongoing erosion. For the Asian group, on average, the March reading is 51.2, and there has been a progression to stronger readings from 49.9 over 12 months to 50.5 over six months and to 50.8 over three months.

260402.jpg

On balance, manufacturing was quite uneven in March; however, there's a progression of improvement that is still in place. But with rising oil prices, war in Iran, and lots of knock-on effects to supply trains, it's likely that these readings are going to fall on harder times in the months ahead—unless the Iran war can be wrapped up in very, very, short order. According to the Baltic Dry index, there hasn't been much reduction in global shipping of dry goods. That index excludes oil and other wet goods shipments that clearly have been impeded. However, giving it more time, we may see that the dry index begins to show some difficulties.

Global Manufacturing PMIs Stall—Will It Get Worse?

Andrew Cates

**Global shipping costs**
The Baltic Dirty Tanker Index has surged to multi-year highs, reflecting a sharp tightening in global oil shipping markets. The primary driver is the escalation in Middle East tensions, particularly the effective disruption to flows through the Strait of Hormuz—a critical artery for roughly a fifth of global oil trade. Heightened security risks, including missile and drone attacks on vessels and port infrastructure, have forced rerouting, increased insurance premia and reduced effective tanker supply. At the same time, longer voyage distances—especially for Gulf exports diverted around the Cape—are tying up capacity and amplifying rate pressures. The result is a classic squeeze: constrained supply of available ships meeting elevated demand for transport, pushing freight costs sharply higher.

260401Z1.jpg

**Supply Chain Bottlenecks**
Flash PMI data point to a renewed build-up of supply chain pressures across the major economies. Supplier delivery times—where readings below 50 indicate slower deliveries—have deteriorated in both the US and UK, with the latter showing a particularly sharp decline. The euro area, while more stable, is also drifting in the same direction. This broad-based softening suggests that the disruptions visible in energy and shipping markets are now feeding into the real economy. Longer delivery times are typically an early indicator of tightening supply conditions, rising input costs and, ultimately, renewed pipeline inflation pressures. While not yet at the extremes seen during the pandemic, the direction of travel is clear: supply chains are becoming less efficient just as geopolitical risks intensify.

260401Z2.jpg

**Policy Uncertainty Versus Market Volatility**
A striking divergence is emerging between policy uncertainty and financial market volatility. The US Economic Policy Uncertainty Index has risen sharply, reflecting the intensifying geopolitical backdrop, trade disruptions and an increasingly complex policy environment. By contrast, the VIX—while off its lows—remains relatively contained by historical standards. This gap suggests that financial markets may be underpricing the scale and persistence of current risks. Either uncertainty begins to recede, or market volatility has further to rise. For now, the message is clear: policymakers are operating in a far more uncertain world than markets appear to be discounting.

260401Z3.jpg

**Oil Prices and Monetary Policy** 
The sharp rise in oil prices is once again feeding directly into short-term interest rate expectations, with a strong positive correlation evident between WTI and US 2-year Treasury yields. As energy prices surge, markets are reassessing the near-term inflation outlook and the likely policy response, pushing yields higher. This reflects a familiar dynamic: energy shocks tighten financial conditions not just directly, but via expectations of more restrictive monetary policy. That said, there are important caveats. Medium-term market-based inflation expectations remain relatively well contained, suggesting credibility in central banks’ ability to anchor inflation over time. Moreover, recent communication from Fed Chair Powell indicates that the Federal Reserve is in no immediate hurry to raise rates, pointing instead to a more cautious, data-dependent approach in the face of heightened uncertainty.

260401Z4.jpg

**Loose Labour Markets**
Wage growth across the US, UK and euro area continues to moderate, pointing to a gradual loosening in labour market conditions. The sharp post-pandemic surge in wage pressures—particularly pronounced in the US—has clearly faded, with all three regions now on a downward trajectory. This matters in the current context: while the oil shock is pushing headline inflation higher and complicating the near-term outlook, easing wage dynamics reduce the risk of persistent second-round effects. In turn, this lessens the urgency for central banks to respond aggressively with tighter policy. The result is a more nuanced policy backdrop—one where energy-driven inflation pressures are rising, but underlying domestic cost pressures are moving in the opposite direction.

260401Z5.jpg

**Headline Inflation in Advanced Economies**
Despite the recent energy shock, broader inflation dynamics across advanced economies remain relatively well behaved. The euro area HICP flash estimate rose from 1.9% in February to 2.5% in March, driven largely by higher energy prices. However, core inflation edged down to 2.3% from 2.4%, suggesting that pass-through into underlying price pressures remains limited for now. More generally, inflation across many advanced economies continues to hover close to central bank targets—a marked contrast to the peaks seen in 2022. While higher oil prices will almost certainly continue to lift headline inflation in the near term, and the risk is clearly tilted toward further upside, the broader picture for now remains one of relatively contained underlying pressures. This suggests the current shock is more likely to complicate the disinflation process—potentially slowing or interrupting it—rather than decisively reversing it, though the balance of risks has become less favourable.

260401Z6.jpg

Amid tentative signs of de-escalation from the US administration over the past 48 hours—including suggestions that the conflict with Iran could conclude relatively quickly—financial markets have begun to retrace some of last week’s sharp repricing of Middle East risk. Oil prices have come off their highs, while equities and bonds have rallied as risk premia ease. That said, the earlier phase of the week saw a decisive adjustment: oil surged, front-end yields moved higher, and uncertainty rose as investors grappled with the implications of disrupted energy flows. Even now, the overall adjustment has been uneven—volatility has picked up, but not to levels typically associated with sustained geopolitical stress—raising questions about how fully markets are internalising both the risks and the rapidly shifting outlook. Our charts this week capture these cross-currents. Tanker rates have spiked as shipping routes are disrupted and capacity tightens (chart 1), while PMI delivery times point to early signs of supply chain strain feeding into the real economy (chart 2). At the same time, the divergence between elevated policy uncertainty and relatively contained market volatility suggests there could have been a degree of complacency (chart 3). The rise in oil prices is already feeding into higher short-term yields, though this is being tempered by cooling labour markets, anchored inflation expectations and more cautious central bank signalling (charts 4 and 5). Meanwhile, euro area flash CPI has picked up, but core inflation remains relatively benign, suggesting underlying price pressures are still contained for now (chart 6).

Economy in Brief

Jump to:

Weekly Chain Store Sales Up Again

March Industrial Production Data Show Declines in Developed and Emerging Nations

ECRI Leaders' Forward Momentum Down

ECRI Leaders' Forward Momentum Down

Some Employment Gains in Canada, But Lower Unemployment Reflects Reduced Participation

U.S. Payrolls Firm

U.S. Payrolls Firm

Australian Trade Deficit Wider in March