Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050413a.jpg" width="353">
US retail sales rose 0.3% in March but the gain fell quite short of Consensus expectations for a 0.8% rise. The 0.5% increase in February was unrevised though figures back to 2003 were revised slightly lower.
March sales excluding motor vehicles also disappointed Consensus expectations for a 0.6% rise.The 0.1% up tick followed a downwardly revised 0.6% increase in February.
Spending on discretionary items eased after increasing strongly through February. Sales at furniture &amp; home furnishings stores slipped 0.5% (+4.1% y/y) after a 1.5% February jump. General merchandise stores reversed an unrevised 0.7% (+4.4% y/y) gain in February and apparel store sales dropped 1.9% (+1.6% y/y) after unrevised gains of 1.1% and 1.9% during the prior two months.
March nonauto retail sales less gasoline fell 0.1% (+5.4% y/y) following a 0.5% February increase. Gasoline service station sales jumped 2.1% (17.8% y/y) as gasoline prices rose 8.9% to an average $2.08 per gallon. In the second week of April gasoline prices rose further to an average $2.28.
Sales of nonstore retailers (internet and catalogue) jumped 1.2% m/m (+13.4% y/y).
Building material store sales surged 1.5% (+5.5% y/y) but the y/y gain eased considerably from the earlier pace. The comparison was tough given the 9.7% m/m spike in March 2004.
Economic Policy and the Sustainability of U.S. Productivity Growth from New York Federal Reserve Bank President Timothy F. Geithner are available <a href="http://www.newyorkfed.org/newsevents/speeches/2005/gei050412.html"> here</a>.
The minutes to the latest meeting of the Federal Open Market Committee can be found <a href="http://www.federalreserve.gov/fomc/minutes/20050322.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Mar</th>
<th scope="col">Feb</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>0.3%</td>
<td>0.5%</td>
<td>5.8%</td>
<td>7.3%</td>
<td>4.3%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.1%</td>
<td>0.6%</td>
<td>6.6%</td>
<td>8.3%</td>
<td>4.7%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
Mortgage Applications Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 13, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050413b.jpg" width="353">
The Mortgage Bankers Association reported that mortgage applications recovered 6.1% last week to the highest level in four weeks. Nevertheless, the average level so far in April is 3.9% below March which fell 4.8% from February.
Purchase applications reversed all of the prior week&#39;s decline and rose 6.4%. The average so far in April is up 0.5% versus March. During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance recovered all of the prior two weeks&#39; declines with a 5.6% jump though the April average still is down 9.8% from March.
The effective interest rate on a conventional 30-year mortgage rose to 6.22% and the effective rate on a 15-year mortgage rose to 5.85%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
 Moving Up: Trends in Homeownership and Mortgage Indebtedness from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/files/br/brq105wl.pdf"> here</a>. 

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">04/08/05</th>
<th scope="col">04/01/05</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 class="odd">
<td class="firstcol">Total Market Index</td>
<td>683.6</td>
<td>644.5</td>
<td>-13.3%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>474.5</td>
<td>446.0</td>
<td>9.8%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,899.6</td>
<td>1,798.8</td>
<td>-33.6%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
UK Unemployment Ticks Up in February, But Employment Also Shows Strong Rise 
by <a href="/comment/Stone.html">Carol Stone</a> April 13, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050413c.jpg" width="353">
Press reports on today&#39;s UK labor force data highlight the increase in unemployment measures. The ILO-defined concept, similar to that in the US, rose in the three months to February by 0.1% to 4.8%. The so-called &quot;claimant count&quot; increased 11,000 in March, with the associated rate rising to 2.7% from 2.6% in February. Wire service headlines and story leads pointed out that this was the largest monthly increase in claimants since May 2003, and noted that it was unfortunate coincidence that the news came on the very day the Prime Minister and the Labour Party begin their quest for reelection next month.
There are offsetting factors, though, that remove some of the sting from these unemployment figures. Firstly, both unemployment rates even at their new, slightly increased levels, remain the second lowest in nearly 30 years. Except for three recent months at 2.6%, the claimant count rate has not been as low as 2.7% since May 1975. The broader ILO unemployment rate was at or above 4.8% from September 1975 through last June; since then, the low was just 4.6% in August. So these latest figures hardly indicate a significant upturn, let alone a major uptrend in unemployment. (The ILO definition represents a three-month moving average centered on January.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050413d.jpg" width="353">
Moreover, employment rose once again and by a larger amount than in the previous several reports. The labor force measure, the number of people saying they have jobs, rose 72,000 to 28.64 million, still another a new high. This too is a 3-month centered moving average for January, compared to the December figure.
The average earnings index (AEI) for February (a 3-month moving average ending in February) was up 4.7% on a year ago, compared with 4.4% in the previous couple of reports. However, the acceleration was due to bonus payments, as the underlying base earnings measure eased to 4.3% from 4.4%.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/UK.HTM">United Kingdom</a> Seasonally adjusted data</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Jan 2005</th>
<th scope="col">Dec 2004</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">Unemployment Rate (%)</td>
<td></td>
<td>&nbsp;</td>
<td>4.8*</td>
<td>4.7*</td>
<td>4.7</td>
<td>5.0</td>
<td>5.2</td>
</tr>
<tr>
<td class="firstcol">Claimant Count (thous)</td>
<td>829</td>
<td>818</td>
<td>814</td>
<td>824</td>
<td>854</td>
<td>933</td>
<td>947</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (mil)</td>
<td></td>
<td>&nbsp;</td>
<td>28.64*</td>
<td>28.57*</td>
<td>28.44</td>
<td>28.18</td>
<td>27.91</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Change (thous)</td>
<td></td>
<td>&nbsp;</td>
<td>+72K</td>
<td>+46K</td>
<td>+0.9%</td>
<td>+0.9%</td>
<td>+0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Earnings Index Incl Bonuses: &quot;Headline Rate&quot;(%)**</td>
<td></td>
<td>4.7</td>
<td>4.4</td>
<td>4.4</td>
<td>4.4</td>
<td>3.4</td>
<td>3.5</td>
</tr>
<tr>
<td class="firstcol">Average Earnings Index Ex Bonuses: &quot;Headline Rate&quot; (%)**</td>
<td></td>
<td>4.3</td>
<td>4.4</td>
<td>4.4</td>
<td>4.2</td>
<td>3.6</td>
<td>4.0</td>
</tr>
</tbody>
</table>
</body>
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US retail sales rose 0.3% in March but the gain fell quite short of Consensus expectations for a 0.8% rise. The 0.5% increase in February was unrevised though figures back to 2003 were revised slightly lower. March sales excluding [...]

U.S. Retail Sales' Gain Light

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412g.jpg" width="353">
China and India recently pledged to increase their bilateral trade from the $14 billion reached in 2003 to $20 billion by 2008 and $30 billion by 2010.
Data enabling one to analyze these prospects are available in the Haver data base, IMFDOTM, which lists monthly exports to and imports from some 210 countries and 24 aggregates. Because it is so detailed, the information tends is published with a long lag. For example, the latest data available today is for November, 2004
One of the first things that emerges from the bilateral trade data between China and India is the contrast between the magnitude of foreign trade of the two countries. In 2003, the last full year available, China&#39;s total exports amounted to $428.3 billion and imports, $412.8. India&#39;s total exports were $60.8 billion and imports, $69.8 billion. The monthly data for total exports of the two countries are shown in the attached chart.
Not only is there a big difference in the importance of total trade, there is also a significant difference in the importance of the bilateral trade to each country. Although the bilateral trade between India and China has been small, it has been more important to India than to China. India&#39;s exports to China amounted to 4.5% of total exports in 2003, while imports from China amounted to 5.3% of total imports. China&#39;s exports to India, in contrast, were only 0.8% of total exports and imports from India were 1.0% of total imports. In trade among all the Asian countries, India&#39;s exports to China were 16.5% of total exports to Asia and imports from China were 24.0% of Indian imports from Asia. China&#39;s exports to India accounted for only 2.3% of total Chinese exports to Asia and imports from India were only 2.7% of total Chinese imports from Asia.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/emerging.htm">INDIA TRADE IN 2003</a></th>
<th scope="col">Mil US$</th>
<th scope="col">&nbsp;</th>
<th scope="col">%</th>
<th scope="col">&nbsp;</th>
<th scope="col">Mil US$</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports to China</td>
<td>2,713.3</td>
<td>Percent of Total</td>
<td>4.5</td>
<td>Total Trade with China</td>
<td>6,447.5</td>
</tr>
<tr>
<td class="firstcol">Exports to Asia</td>
<td>16,452.8</td>
<td>Percent of Asia</td>
<td>16.5</td>
<td>Total Trade with Asia</td>
<td>31,983.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Exports&nbsp;</td>
<td>30,793.7</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Total Trade</td>
<td>130,620.2</td>
</tr>
<tr>
<td class="firstcol">Imports from China</td>
<td>3,734.2</td>
<td>Percent of Total</td>
<td>5.3</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports from Asia</td>
<td>15,531.1</td>
<td>Percent of Asia</td>
<td>24.0</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Total Imports</td>
<td>69,826.5</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol"><a href="http://www.haverselect.com/dlx/emerging.htm">CHINA TRADE IN 2003</a></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Exports to India</td>
<td>3,343.6</td>
<td>Percent of Total</td>
<td>0.8</td>
<td>Total Trade with India</td>
<td>7,595.</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports to Asia</td>
<td>145,055.5</td>
<td>Percent of Asia</td>
<td>2.3</td>
<td>Total Trade with Asia</td>
<td>301,630.0</td>
</tr>
<tr>
<td class="firstcol">Total Exports&nbsp;</td>
<td>428,273.9</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Total Trade</td>
<td>841,110.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports from India</td>
<td>4,251.5</td>
<td>Percent of Total</td>
<td>1.0</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Imports from Asia</td>
<td>156,574.5</td>
<td>Percent of Asia</td>
<td>2.7</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Imports</td>
<td>412,836.6</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
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China and India recently pledged to increase their bilateral trade from the $14 billion reached in 2003 to $20 billion by 2008 and $30 billion by 2010. Data enabling one to analyze these prospects are available in the Haver data base, [...]

Trade Between China and India

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412f.jpg" width="353">
Chain store sales rose 0.3% for the second week according to the International Council of Shopping Centers (ICSC)-UBS survey. The increase last week pulled the average level in April about even with 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 nonauto retail sales less gasoline.
The leading indicator of chain store sales from ICSC fell by 0.2% (-1.5% y/y), the third consecutive weekly decline.
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.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">04/09/05</th>
<th scope="col">04/02/05</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>452.9</td>
<td>451.5</td>
<td>3.9%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
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Chain store sales rose 0.3% for the second week according to the International Council of Shopping Centers (ICSC)-UBS survey. The increase last week pulled the average level in April about even with March. During the last ten years [...]

Chain Store Sales Up Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412c.jpg" width="353">
The March Small Business Optimism Index reported by the National Federation of Independent Business (NFIB) fell 1.1% from February and is down 4.8% from the peak last November. The percentage of firms expecting the economy to improve fell to 16% versus 47% in November.
During the last ten years there has been a 64% correlation between the level of the NFIB index and the two quarter change in real GDP.
The percentage of firms raising average selling prices jumped to 25%.
The percentage of firms planning to raise employment fell to 10% though the percentage of firms with one or more job openings held steady at 24%, the highest level since 2001. During the last ten years there has been a 67% correlation between these hiring plans and the three month growth in nonfarm payrolls.
The percentage of firms planning to raise capital spending improved to 36% and continued a recent trend of improvement.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412d.jpg" width="353"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412e.jpg" width="353">

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Small Business Optimism Index (1986=100)</td>
<td>102.5</td>
<td>103.6</td>
<td>0.0%</td>
<td>104.6</td>
<td>101.3</td>
<td>101.2</td>
</tr>
</tbody>
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</body>
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The March Small Business Optimism Index reported by the National Federation of Independent Business (NFIB) fell 1.1% from February and is down 4.8% from the peak last November. The percentage of firms expecting the economy to improve [...]

Small Business Optimism Extended Decline, Pricing Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412b.jpg" width="353">
The U.S. foreign trade deficit in February surged to another record of $61.0B and exceeded Consensus expectations for a $59.0B deficit. January&#39;s figure was little revised.
Total exports were unchanged for the second consecutive month. Goods exports were about flat m/m (9.4% y/y) as a 2.7% m/m gain in industrial supplies and a 3.2% (16.6% y/y) increase in non-auto consumer goods offset declines elsewhere. Capital goods exports fell by 1.3% (+3.3% y/y) for the second consecutive m/m decline and &quot;other&quot; exports fell 1.6% (+1.5% y/y).
Exports of advanced technology products fell for the third month in the last four (-7.2% y/y).
Services exports were about unchanged for the second month (7.1% y/y) though passenger fares (+9.4% y/y) and spending on travel (+5.2% y/y) both fell.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412a.jpg" width="353">
Imports of petroleum imports jumped 10.3% (+32.9% y/y) and lifted total imports by 1.6%. The average price of crude oil jumped to $36.85 per bbl. (+26.3% y/y) and imports of non-petroleum goods rose 0.6% (+16.3% y/y). Capital goods imports fell 2.5 (+14.1% y/y) and nonauto consumer goods imports rose 2.0% (21.0% y/y).
The US trade deficit with China improved m/m in February to $13.9B ($162.0B in 2004) though imports are up nearly 50% y/y). The US trade deficit with Japan deepened to $6.9B ($75.2B in 2004) and the trade deficit with the Asian NICs halved m/m to $1.1B ($21.9B in 2004). The US trade deficit with the European Union deepened to $8.5B ($110.0B in 2004) on a 7.5% y/y gain in imports.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</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">Trade Deficit</td>
<td>$61.0B</td>
<td>$58.5B</td>
<td>$45.9B (2/04)</td>
<td>$617.1B</td>
<td>$496.5B</td>
<td>$421.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>0.0%</td>
<td>0.0%</td>
<td>8.7%</td>
<td>12.4%</td>
<td>4.6%</td>
<td>-3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>1.6%</td>
<td>1.8%</td>
<td>16.8%</td>
<td>16.3%</td>
<td>8.5%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
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The U.S. foreign trade deficit in February surged to another record of $61.0B and exceeded Consensus expectations for a $59.0B deficit. January's figure was little revised. Total exports were unchanged for the second consecutive [...]

Flat Exports & Soaring Oil Prices = Another Record U.S. Trade Deficit

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412b.jpg" width="353">
The U.S. foreign trade deficit in February surged to another record of $61.0B and exceeded Consensus expectations for a $59.0B deficit. January&#39;s figure was little revised.
Total exports were unchanged for the second consecutive month. Goods exports were about flat m/m (9.4% y/y) as a 2.7% m/m gain in industrial supplies and a 3.2% (16.6% y/y) increase in non-auto consumer goods offset declines elsewhere. Capital goods exports fell by 1.3% (+3.3% y/y) for the second consecutive m/m decline and &quot;other&quot; exports fell 1.6% (+1.5% y/y).
Exports of advanced technology products fell for the third month in the last four (-7.2% y/y).
Services exports were about unchanged for the second month (7.1% y/y) though passenger fares (+9.4% y/y) and spending on travel (+5.2% y/y) both fell.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412a.jpg" width="353">
Imports of petroleum imports jumped 10.3% (+32.9% y/y) and lifted total imports by 1.6%. The average price of crude oil jumped to $36.85 per bbl. (+26.3% y/y) and imports of non-petroleum goods rose 0.6% (+16.3% y/y). Capital goods imports fell 2.5 (+14.1% y/y) and nonauto consumer goods imports rose 2.0% (21.0% y/y).
The US trade deficit with China improved m/m in February to $13.9B ($162.0B in 2004) though imports are up nearly 50% y/y). The US trade deficit with Japan deepened to $6.9B ($75.2B in 2004) and the trade deficit with the Asian NICs halved m/m to $1.1B ($21.9B in 2004). The US trade deficit with the European Union deepened to $8.5B ($110.0B in 2004) on a 7.5% y/y gain in imports.

<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/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</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">Trade Deficit</td>
<td>$61.0B</td>
<td>$58.5B</td>
<td>$45.9B (2/04)</td>
<td>$617.1B</td>
<td>$496.5B</td>
<td>$421.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>0.0%</td>
<td>0.0%</td>
<td>8.7%</td>
<td>12.4%</td>
<td>4.6%</td>
<td>-3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>1.6%</td>
<td>1.8%</td>
<td>16.8%</td>
<td>16.3%</td>
<td>8.5%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Small Business Optimism Extended Decline, Pricing Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 12, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412c.jpg" width="353">
The March Small Business Optimism Index reported by the National Federation of Independent Business (NFIB) fell 1.1% from February and is down 4.8% from the peak last November. The percentage of firms expecting the economy to improve fell to 16% versus 47% in November.
During the last ten years there has been a 64% correlation between the level of the NFIB index and the two quarter change in real GDP.
The percentage of firms raising average selling prices jumped to 25%.
The percentage of firms planning to raise employment fell to 10% though the percentage of firms with one or more job openings held steady at 24%, the highest level since 2001. During the last ten years there has been a 67% correlation between these hiring plans and the three month growth in nonfarm payrolls.
The percentage of firms planning to raise capital spending improved to 36% and continued a recent trend of improvement.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412d.jpg" width="353"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412e.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/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Small Business Optimism Index (1986=100)</td>
<td>102.5</td>
<td>103.6</td>
<td>0.0%</td>
<td>104.6</td>
<td>101.3</td>
<td>101.2</td>
</tr>
</tbody>
</table>
Chain Store Sales Up Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 12, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412f.jpg" width="353">
Chain store sales rose 0.3% for the second week according to the International Council of Shopping Centers (ICSC)-UBS survey. The increase last week pulled the average level in April about even with 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 nonauto retail sales less gasoline.
The leading indicator of chain store sales from ICSC fell by 0.2% (-1.5% y/y), the third consecutive weekly decline.
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">04/09/05</th>
<th scope="col">04/02/05</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>452.9</td>
<td>451.5</td>
<td>3.9%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
 Trade Between China and India 
by <a href="/comment/Curley.html">Louise Curley</a> April 12, 2005


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050412g.jpg">
China and India recently pledged to increase their bilateral trade from the $14 billion reached in 2003 to $20 billion by 2008 and $30 billion by 2010.
Data enabling one to analyze these prospects are available in the Haver data base, IMFDOTM, which lists monthly exports to and imports from some 210 countries and 24 aggregates. Because it is so detailed, the information tends is published with a long lag. For example, the latest data available today is for November, 2004
One of the first things that emerges from the bilateral trade data between China and India is the contrast between the magnitude of foreign trade of the two countries. In 2003, the last full year available, China&#39;s total exports amounted to $428.3 billion and imports, $412.8. India&#39;s total exports were $60.8 billion and imports, $69.8 billion. The monthly data for total exports of the two countries are shown in the attached chart.
Not only is there a big difference in the importance of total trade, there is also a significant difference in the importance of the bilateral trade to each country. Although the bilateral trade between India and China has been small, it has been more important to India than to China. India&#39;s exports to China amounted to 4.5% of total exports in 2003, while imports from China amounted to 5.3% of total imports. China&#39;s exports to India, in contrast, were only 0.8% of total exports and imports from India were 1.0% of total imports. In trade among all the Asian countries, India&#39;s exports to China were 16.5% of total exports to Asia and imports from China were 24.0% of Indian imports from Asia. China&#39;s exports to India accounted for only 2.3% of total Chinese exports to Asia and imports from India were only 2.7% of total Chinese imports from Asia.

<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/emerging.htm">INDIA TRADE IN 2003</a></th>
<th scope="col">Mil US$</th>
<th scope="col">&nbsp;</th>
<th scope="col">%</th>
<th scope="col">&nbsp;</th>
<th scope="col">Mil US$</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports to China</td>
<td>2,713.3</td>
<td>Percent of Total</td>
<td>4.5</td>
<td>Total Trade with China</td>
<td>6,447.5</td>
</tr>
<tr>
<td class="firstcol">Exports to Asia</td>
<td>16,452.8</td>
<td>Percent of Asia</td>
<td>16.5</td>
<td>Total Trade with Asia</td>
<td>31,983.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Exports&nbsp;</td>
<td>30,793.7</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Total Trade</td>
<td>130,620.2</td>
</tr>
<tr>
<td class="firstcol">Imports from China</td>
<td>3,734.2</td>
<td>Percent of Total</td>
<td>5.3</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports from Asia</td>
<td>15,531.1</td>
<td>Percent of Asia</td>
<td>24.0</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Total Imports</td>
<td>69,826.5</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol"><a href="http://www.haverselect.com/dlx/emerging.htm">CHINA TRADE IN 2003</a></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Exports to India</td>
<td>3,343.6</td>
<td>Percent of Total</td>
<td>0.8</td>
<td>Total Trade with India</td>
<td>7,595.</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports to Asia</td>
<td>145,055.5</td>
<td>Percent of Asia</td>
<td>2.3</td>
<td>Total Trade with Asia</td>
<td>301,630.0</td>
</tr>
<tr>
<td class="firstcol">Total Exports&nbsp;</td>
<td>428,273.9</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Total Trade</td>
<td>841,110.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports from India</td>
<td>4,251.5</td>
<td>Percent of Total</td>
<td>1.0</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Imports from Asia</td>
<td>156,574.5</td>
<td>Percent of Asia</td>
<td>2.7</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Imports</td>
<td>412,836.6</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050411c.jpg" width="353">
The advance estimate for the year to year growth in Singapore&#39;s first quarter seasonally unadjusted Gross Domestic Product was 2.4%, down from 6.5% in the fourth quarter of 2004 and was well below the average growth for all of 2004 at 7.5%. The manufacturing sector was up 3.0%, compared with an increase of 14.1% in the fourth quarter of 2004. Construction continued to decline but the first quarter decline of 6.5% was smaller that that of the 8.4% decline in the fourth quarter of 2004. The service sector showed a 3.5% increase compared with 4.8% in the previous quarter.
The advance estimates published by the Ministry of Trade and Industry, based largely on data from the first two months of the quarter, are intended as an early indicator of GDP growth and are subject to revision as more comprehensive data become available. The advance estimates are, however, a good indicator of the actual results as can be seen in the first chart that compares the advance estimates with the actual results. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050411d.jpg" width="353">
Although the first quarter GDP was 2.4% above the first quarter of 2004, the Ministry of Trade and Industry noted that on a seasonally adjusted annual rate basis, GDP in the first quarter declined by 5.8% from the fourth quarter of 2004, which had been 7.9% above the third quarter. Part of the wide swing from growth of 7.9% to a decline of 5.8% can be attributed to production in the Biomedical sector which includes the volatile pharmaceutical industry. The second chart compares the production indexes for the biomedical and electronics industries and shows that the volatility of the biomedical sector is far greater even than that of the electronics industry, which itself is noted for its wide swings.

<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/EMERGEPR/@P4/@P4.HTM">Singapore: Gross Domestic Product</a></th>
<th scope="col">Q1 05</th>
<th scope="col">Q4 04</th>
<th scope="col">Q3 04</th>
<th scope="col">Q2 04</th>
<th scope="col">Q1 04</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">Y/Y Advance Estimates %</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>
<td class="firstcol">&nbsp; Total</td>
<td>2.4</td>
<td>6.5</td>
<td>7.2</td>
<td>12.3</td>
<td>7.9</td>
<td>8.5</td>
<td>1.1</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Manufacturing</td>
<td>3.0</td>
<td>14.1</td>
<td>11.2</td>
<td>20.1</td>
<td>10.2</td>
<td>13.9</td>
<td>3.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Construction</td>
<td>-6.5</td>
<td>-8.4</td>
<td>-11.4</td>
<td>-6.4</td>
<td>1.0</td>
<td>-6.3</td>
<td>-10.7</td>
<td>-10.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Services</td>
<td>3.5</td>
<td>4.8</td>
<td>6.9</td>
<td>11.4</td>
<td>7.2</td>
<td>7.6</td>
<td>1.0</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">Q/Q SA annual rate %</td>
<td>-5.8</td>
<td>7.9</td>
<td>0.7</td>
<td>7.5</td>
<td>10.1</td>
<td>8.5</td>
<td>1.1</td>
<td>2.2</td>
</tr>
<tr class="odd">
<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>
<td class="firstcol">Manufacturing Production 2003=100</td>
<td>Feb 05</td>
<td>Jan 05</td>
<td>Feb 04</td>
<td>M/M</td>
<td>Y/Y</td>
<td>&nbsp;2004&nbsp;&nbsp;</td>
<td>&nbsp;2003</td>
<td>&nbsp; 2002</td>
</tr>
<tr class="odd">
<td class="firstcol">Biomedical</td>
<td>53.4</td>
<td>102.1</td>
<td>111.3</td>
<td>-67.1</td>
<td>-52.0</td>
<td>25.7</td>
<td>10.8</td>
<td>43.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pharmaceutical</td>
<td>42.3</td>
<td>173.7</td>
<td>116.1</td>
<td>-75.6</td>
<td>-63.6</td>
<td>29.8</td>
<td>13.4</td>
<td>48.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Electronics</td>
<td>97.9</td>
<td>110.0</td>
<td>100.3</td>
<td>-11.0</td>
<td>-2.4</td>
<td>14.8</td>
<td>4.5</td>
<td>5.2</td>
</tr>
<tr>
<td class="firstcol">Chemicals and Products</td>
<td>101.4</td>
<td>114.6</td>
<td>100.3</td>
<td>-11.5</td>
<td>1.1</td>
<td>7.9</td>
<td>6.5</td>
<td>11.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Precision Equipment</td>
<td>86.6</td>
<td>102.6</td>
<td>99.8</td>
<td>-15.6</td>
<td>-13.2</td>
<td>7.8</td>
<td>-0.7</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">Transport Equipment</td>
<td>128.6</td>
<td>130.4</td>
<td>101.3</td>
<td>-1.4</td>
<td>27.0</td>
<td>24.0</td>
<td>-6.0</td>
<td>8.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The advance estimate for the year to year growth in Singapore's first quarter seasonally unadjusted Gross Domestic Product was 2.4%, down from 6.5% in the fourth quarter of 2004 and was well below the average growth for all of 2004 at [...]

Advance Estimate of Singapore's Y/Y Growth of GDP in Q1 Implies a Big Decline in Q/Q Seasonally Adjusted Annual Rate

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050411a.jpg" width="353">
The Leading Index of the Big 7 OECD economies slipped 0.3% in February following three consecutive months of gain. The decline reversed the earlier improvement in the index&#39;s six month growth rate and it fell to 0.3%, the weakest in nearly two years.
During the last ten years there has been a 69% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven countries in the OECD.
The 0.1% February decline in the leaders for the European Union (15 countries) was the third in a row and pulled the six month growth rate to 0.5%, it&#39;s weakest in nearly two years. The German leaders fell 0.4% m/m and six month growth fell to a barely positive 0.2%. The French leaders slipped for the third consecutive month pulling six month growth to 0.1% and the fourth consecutive monthly decline in the Italian leaders lowered the six month growth rate to -0.9%.
The leading index for the US economy slipped 0.1% following three months of moderate gain leaving six month growth subdued at 1.4%.The leaders for Japan fell 0.8% and six month growth fell to -0.4%.
Growth in the leaders for the UK economy slipped for the fourth consecutive month pulling six month growth solidly negative at -1.6%.The Canadian leaders didn&#39;t decline for the first month since last July but six month growth remained a negative 2.7%.
The latest OECD Leading Indicator report can be found <a href="http://www.oecd.org/dataoecd/38/22/34695572.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/OECDMEI/OECDMEI.HTM">OECD</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</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">Composite Leading Index&nbsp;</td>
<td>102.22</td>
<td>102.48</td>
<td>0.3%</td>
<td>101.99</td>
<td>97.51</td>
<td>96.33</td>
</tr>
<tr>
<td class="firstcol">&nbsp;6 Month Growth Rate</td>
<td>0.3%</td>
<td>0.9%</td>
<td>&nbsp;</td>
<td>3.6%</td>
<td>2.5%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Leading Index of the Big 7 OECD economies slipped 0.3% in February following three consecutive months of gain. The decline reversed the earlier improvement in the index's six month growth rate and it fell to 0.3%, the weakest in [...]

OECD Leaders Decline Broadly

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

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Michael J. Moran

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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.

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- 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

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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.

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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

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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.

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- 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

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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.

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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.

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**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.

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**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.

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**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.

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**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.

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**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.

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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:

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Flat Exports & Soaring Oil Prices = Another Record U.S. Trade Deficit

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OECD Leaders Decline Broadly