Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224c.jpg" width="353">
Initial claims for unemployment insurance 9,000 to 312,000 last week following three weeks of sharp decline. The prior week&#39;s level was little revised and Consensus expectations had been for 309,000 claims.
Despite the increase, claims in February are 7.8% below the January average. The four week moving average of initial claims fell to 308,750 (-14.6% y/y).
Continuing claims for unemployment insurance fell 62,000 following a deepened 19,000 decline the prior week.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 66% correlation with the level of continuing claims.
The insured rate of unemployment was stable at a low 2.1%.
The February 2005 Minutes of the Federal Open Market Committee meeting are available <a href="http://www.federalreserve.gov/fomc/minutes/20050202.htm"> here</a>.
Expectations and the Monetary Policy Transmission Mechanism from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/Publicat/econrev/Pdf/4Q04sell.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">02/19/05</th>
<th scope="col">02/12/05</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">Initial Claims</td>
<td>312</td>
<td>303</td>
<td>-11.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,650</td>
<td>-15.8%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
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Initial claims for unemployment insurance 9,000 to 312,000 last week following three weeks of sharp decline. The prior week's level was little revised and Consensus expectations had been for 309,000 claims. Despite the increase, [...]

Initial Jobless Insurance Claims Up Modestly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224b.jpg" width="353">
Durable goods orders fell 0.9% in January following an upwardly revised gain in December of 1.4%. Consensus expectations had been for no change.
Orders for transportation equipment weakened during the last two months, down 5.3% in January and 2.2% in December due to huge declines in commercial and defense aircraft orders. Less transportation, durable goods orders rose 0.8% (13.2% y/y) last month following an upwardly revised 2.8% December increase.
Nondefense capital goods orders rose 0.2% but less aircraft orders rose 2.9% after an upwardly revised 3.3% December spurt.
Orders for computers &amp; electronic products fell 1.2% (+11.1% y/y) following the upwardly revised 8.3% surge in December. Electrical equipment orders jumped 13.1% (14.6% y/y) and machinery orders rose 0.3% (18.3% y/y). Primary metals orders logged a third consecutive month of strength with a 1.6% rise (27.2% y/y) and orders for fabricated metals rose 1.2% as well (+7.6% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224a.jpg" width="353">
Inventories of durable goods jumped 0.9% (8.6% y/y). Combined with a 1.5% (12.4% y/y) surge in shipments, which followed a 2.8% December jump, the I/S ratio fell to the lowest level since last May.
Unfilled orders slipped 0.2%, the first monthly decline in a year (+8.9% y/y). As shipments surged during the last two months, the ratio of backlogs to shipments reversed nearly all of last year&#39;s gains.

<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/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</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">Durable Goods Orders</td>
<td>-0.9%</td>
<td>1.4%</td>
<td>11.6%</td>
<td>10.8%</td>
<td>2.6%</td>
<td>-1.7%</td>
</tr>
<tr>
<td class="firstcol">Nondefense Capital Goods</td>
<td>0.2%</td>
<td>-0.7%</td>
<td>18.8%</td>
<td>13.7%</td>
<td>5.6%</td>
<td>-7.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Excluding Aircraft</td>
<td>2.9%</td>
<td>3.3%</td>
<td>17.0%</td>
<td>11.7%</td>
<td>6.6%</td>
<td>-7.1%</td>
</tr>
</tbody>
</table>
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Durable goods orders fell 0.9% in January following an upwardly revised gain in December of 1.4%. Consensus expectations had been for no change. Orders for transportation equipment weakened during the last two months, down 5.3% in [...]

U.S. Durable Goods Orders Lower in January, Trend Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224b.jpg" width="353">
Durable goods orders fell 0.9% in January following an upwardly revised gain in December of 1.4%. Consensus expectations had been for no change.
Orders for transportation equipment weakened during the last two months, down 5.3% in January and 2.2% in December due to huge declines in commercial and defense aircraft orders. Less transportation, durable goods orders rose 0.8% (13.2% y/y) last month following an upwardly revised 2.8% December increase.
Nondefense capital goods orders rose 0.2% but less aircraft orders rose 2.9% after an upwardly revised 3.3% December spurt.
Orders for computers &amp; electronic products fell 1.2% (+11.1% y/y) following the upwardly revised 8.3% surge in December. Electrical equipment orders jumped 13.1% (14.6% y/y) and machinery orders rose 0.3% (18.3% y/y). Primary metals orders logged a third consecutive month of strength with a 1.6% rise (27.2% y/y) and orders for fabricated metals rose 1.2% as well (+7.6% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224a.jpg" width="353">
Inventories of durable goods jumped 0.9% (8.6% y/y). Combined with a 1.5% (12.4% y/y) surge in shipments, which followed a 2.8% December jump, the I/S ratio fell to the lowest level since last May.
Unfilled orders slipped 0.2%, the first monthly decline in a year (+8.9% y/y). As shipments surged during the last two months, the ratio of backlogs to shipments reversed nearly all of last year&#39;s gains.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</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">Durable Goods Orders</td>
<td>-0.9%</td>
<td>1.4%</td>
<td>11.6%</td>
<td>10.8%</td>
<td>2.6%</td>
<td>-1.7%</td>
</tr>
<tr>
<td class="firstcol">Nondefense Capital Goods</td>
<td>0.2%</td>
<td>-0.7%</td>
<td>18.8%</td>
<td>13.7%</td>
<td>5.6%</td>
<td>-7.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Excluding Aircraft</td>
<td>2.9%</td>
<td>3.3%</td>
<td>17.0%</td>
<td>11.7%</td>
<td>6.6%</td>
<td>-7.1%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Up Modestly 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 24, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224c.jpg" width="353">
Initial claims for unemployment insurance 9,000 to 312,000 last week following three weeks of sharp decline. The prior week&#39;s level was little revised and Consensus expectations had been for 309,000 claims.
Despite the increase, claims in February are 7.8% below the January average. The four week moving average of initial claims fell to 308,750 (-14.6% y/y).
Continuing claims for unemployment insurance fell 62,000 following a deepened 19,000 decline the prior week.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 66% correlation with the level of continuing claims.
The insured rate of unemployment was stable at a low 2.1%.
The February 2005 Minutes of the Federal Open Market Committee meeting are available <a href="http://www.federalreserve.gov/fomc/minutes/20050202.htm"> here</a>.
Expectations and the Monetary Policy Transmission Mechanism from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/Publicat/econrev/Pdf/4Q04sell.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">02/19/05</th>
<th scope="col">02/12/05</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">Initial Claims</td>
<td>312</td>
<td>303</td>
<td>-11.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,650</td>
<td>-15.8%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising: An Upside Breakout 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 24, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224d.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising rose to 41 in January, the highest level in nearly two years.
During the last ten years there has been an 88% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume held at a high 71%, indicative of broad based gains.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.
Help-Wanted Advertising and Job Vacancies from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-02.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Jan&nbsp; &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>41</td>
<td>38</td>
<td>38</td>
</tr>
</tbody>
</table>
Energy Prices Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 24, 2005


The average price for unleaded regular gasoline rose to $1.91 per gallon last week and the average price this month of $1.90 is up versus the low of $1.83 in January.
The price of oil firmed even more with the price of West Texas Intermediate crude rising over $50.00 per barrel.
Wholesale natural gas prices moderated last week to $6.02/mmbtu (+11.1% y/y).
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>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224e.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224f.jpg" width="353">

<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/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">02/21/05</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>$1.91</td>
<td>$1.79</td>
<td>12.9%</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>$51.16</td>
<td>$41.78</td>
<td>41.8%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050223d.jpg" width="353">
Has Japan fallen into yet another recession? Last week&#39;s GDP report, with a third consecutive decline in Q4, was read by some analysts as indicating just such a renewed slump. Wednesday in Tokyo, the Ministry of Economy, Trade and Industry (METI) published industry activity data for December that might be seen casting a somewhat brighter light on the Japanese economy.
The All-Industry Activity Index (2000=100) fell 0.3% in December after a 0.2% rise in November. The graph shows that it was strong but erratic in the spring and has softened in the last several months, basically stagnating over the second half of the year.
Among its components, construction activity has been in a long downtrend since the outset of its index in 1993 and it remains on that path. The most favorable observation on this series is that the 3.8% year-on-year decline in December is the smallest since July 2003.
The industrial production index, reported about a week ago, fell 0.8% in December, but that followed a 1.7% jump in November, tracing an erratic month-to-month pattern. The trend, indicated by the December-to-December growth, saw a 1.8% advance, which is slower than the gains for 2003 and 2004 overall.
Tertiary activity, that is, services, was flat in December, but it too had risen in November, and in December was 2.2% ahead of a year earlier. In contrast to other sectors, services seem to be picking up somewhat. This tendency varied widely among service sectors, however, as wholesale and retail trade held some gains, while restaurants and accommodations stumbled. Information services sagged markedly early in 2004, but firmed noticeably late in the year.
Thus, it&#39;s difficult to put a single characterization on the Japanese economy at this time. &quot;Fragile&quot; might fit, with an easy potential to weaken. But service industries, as in other nations&#39; economies, may be providing some stability, helping to diminish cyclical tendencies.

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</table>
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<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Dec 2004</th>
<th scope="col">Nov 2004</th>
<th scope="col">Q4/Q3</th>
<th scope="col">Dec 04/ Dec 03</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">All- Industry Activity</td>
<td>-0.3</td>
<td>+0.2</td>
<td>-0.1</td>
<td>+1.7</td>
<td>+2.3</td>
<td>+0.9</td>
<td>-0.4</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-1.6</td>
<td>-1.0</td>
<td>-0.9</td>
<td>-3.8</td>
<td>-5.7</td>
<td>-5.3</td>
<td>-4.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>-0.8</td>
<td>+1.7</td>
<td>-0.7</td>
<td>+1.8</td>
<td>+5.6</td>
<td>+3.2</td>
<td>-1.2</td>
</tr>
<tr>
<td class="firstcol">Tertiary Activity</td>
<td>0</td>
<td>+0.4</td>
<td>+0.5</td>
<td>+2.2</td>
<td>+2.1</td>
<td>+0.8</td>
<td>0</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: GDP</td>
<td>--</td>
<td>--</td>
<td>-0.1</td>
<td>+0.6 (Q4/Q4)</td>
<td>+2.6</td>
<td>+1.4</td>
<td>-0.3</td>
</tr>
</tbody>
</table>
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Has Japan fallen into yet another recession? Last week's GDP report, with a third consecutive decline in Q4, was read by some analysts as indicating just such a renewed slump. Wednesday in Tokyo, the Ministry of Economy, Trade and [...]

Mixed Trends in Japanese Sectoral Activity

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050223c.jpg" width="353">
The Mortgage Bankers Association reported that mortgage applications fell another 0.6% last week but slight decline during the last two weeks only tempered earlier gains which lifted the average in February 11.1% above January.
Last week&#39;s decline was due to a 1.3% drop in purchase applications. During the last ten years there has been a 59% correlation between the y/y change in purchase applications and the change in new plus existing home sales. Purchase applications in February are down 0.3% versus January.
Applications to refinance ticked up 0.1% following several weeks of strong gain and in February are 25.6% higher than in January.
The effective interest rate on a conventional 30-year mortgage rose to 5.92% versus 5.75% the prior week. The effective rate on a 15-year mortgage also rose to 5.52% last week.
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>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">02/18/05</th>
<th scope="col">02/11/05</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>727.9</td>
<td>732.3</td>
<td>-14.8%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>417.8</td>
<td>423.3</td>
<td>-1.3%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,532.0</td>
<td>2,530.1</td>
<td>-24.7%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
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The Mortgage Bankers Association reported that mortgage applications fell another 0.6% last week but slight decline during the last two weeks only tempered earlier gains which lifted the average in February 11.1% above January. Last [...]

Mortgage Applications Off Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050223b.jpg" width="353">
Chain store sales dipped 0.1% last week and reversed the prior week&#39;s up tick according to the International Council of Shopping Centers (ICSC)-UBS survey.
Sales in February are 0.7% ahead of the January average which rose 0.9% from December.
During the last ten years there has been a 58% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department.
The leading indicator of chain store sales from ICSC fell 0.2 in the latest week (+0.5% y/y).
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">02/19/05</th>
<th scope="col">02/12/05</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>445.6</td>
<td>446.2</td>
<td>1.8%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
</body>
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Chain store sales dipped 0.1% last week and reversed the prior week's up tick according to the International Council of Shopping Centers (ICSC)-UBS survey. Sales in February are 0.7% ahead of the January average which rose 0.9% from [...]

Chain Store Sales Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050223a.jpg" width="353">
Consumer Prices (CPI-U) rose a modest 0.1% in January following an upwardly revised no change the month earlier. Consensus expectations had been for a 0.2% increase for last month.
Prices less food &amp; energy rose the same 0.2% in January as during the prior three months and the gain matched expectations
&quot;Core&quot; commodities prices posted a 0.3% increase, one of the larger increases of the last three years, led by a 1.9% (4.4% y/y) spurt in tobacco prices and a 0.7% (1.3% y/y) gain in new vehicle prices. Apparel prices rose 0.3% (+0.2% y/y) and furniture prices rose 0.1% (0.6% y/y). Personal computer prices rose 0.7% (NSA, -13.6% y/y).
Services prices less energy rose 0.2% for the fourth consecutive month. Shelter prices rose a stable 0.2% (2.7% y/y), medical care services inflation also was stable at a firm 0.4% (5.0% y/y) but public transportation prices fell for the second consecutive month (-1.0% y/y). School tuition rose 0.3% (6.5% y/y).
Energy prices fell for the second consecutive month, pulled lower by a 2.1% (+14.3% y/y) decline in gasoline prices. In February gasoline prices are 4.0% higher than in January and have reversed about half of the decline since November. Fuel oil prices fell 4.9% last month (+20.9% y/y) and natural gas &amp; electricity prices rose 0.1% (+5.9% y/y).
Food prices rose 0.1%, the gain held back by a 4.6% drop (+4.6% y/y) in fruit &amp; vegetable prices.
The chained CPI, which adjusts for shifts in the mix of consumer purchases, rose 0.2% and offset the revised 0.2% December decline. Core chain prices rose for the first time since October.
Real Effects of Inflation Through the Redistribution of Nominal Wealth from the Federal Reserve Bank of Minneapolis can be found <a href="http://www.minneapolisfed.org/research/sr/sr355.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<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/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</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&nbsp;</td>
<td>0.1%</td>
<td>0.0%</td>
<td>2.9%</td>
<td>2.7%</td>
<td>2.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>-0.9%</td>
<td>-2.0%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.8%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-1.1%</td>
<td>-1.3%</td>
<td>10.5%</td>
<td>10.9%</td>
<td>12.2%</td>
<td>-5.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.1%</td>
<td>0.0%</td>
<td>2.8%</td>
<td>3.4%</td>
<td>2.1%</td>
<td>1.8%</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>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>0.2%</td>
<td>-0.2%</td>
<td>2.8%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>2.1%</td>
<td>1.4%</td>
<td>1.1%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Consumer Prices (CPI-U) rose a modest 0.1% in January following an upwardly revised no change the month earlier. Consensus expectations had been for a 0.2% increase for last month. Prices less food & energy rose the same 0.2% in [...]

Consumer Prices Rose As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050223a.jpg" width="353">
Consumer Prices (CPI-U) rose a modest 0.1% in January following an upwardly revised no change the month earlier. Consensus expectations had been for a 0.2% increase for last month.
Prices less food &amp; energy rose the same 0.2% in January as during the prior three months and the gain matched expectations
&quot;Core&quot; commodities prices posted a 0.3% increase, one of the larger increases of the last three years, led by a 1.9% (4.4% y/y) spurt in tobacco prices and a 0.7% (1.3% y/y) gain in new vehicle prices. Apparel prices rose 0.3% (+0.2% y/y) and furniture prices rose 0.1% (0.6% y/y). Personal computer prices rose 0.7% (NSA, -13.6% y/y).
Services prices less energy rose 0.2% for the fourth consecutive month. Shelter prices rose a stable 0.2% (2.7% y/y), medical care services inflation also was stable at a firm 0.4% (5.0% y/y) but public transportation prices fell for the second consecutive month (-1.0% y/y). School tuition rose 0.3% (6.5% y/y).
Energy prices fell for the second consecutive month, pulled lower by a 2.1% (+14.3% y/y) decline in gasoline prices. In February gasoline prices are 4.0% higher than in January and have reversed about half of the decline since November. Fuel oil prices fell 4.9% last month (+20.9% y/y) and natural gas &amp; electricity prices rose 0.1% (+5.9% y/y).
Food prices rose 0.1%, the gain held back by a 4.6% drop (+4.6% y/y) in fruit &amp; vegetable prices.
The chained CPI, which adjusts for shifts in the mix of consumer purchases, rose 0.2% and offset the revised 0.2% December decline. Core chain prices rose for the first time since October.
Real Effects of Inflation Through the Redistribution of Nominal Wealth from the Federal Reserve Bank of Minneapolis can be found <a href="http://www.minneapolisfed.org/research/sr/sr355.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<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/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</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&nbsp;</td>
<td>0.1%</td>
<td>0.0%</td>
<td>2.9%</td>
<td>2.7%</td>
<td>2.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>-0.9%</td>
<td>-2.0%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.8%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-1.1%</td>
<td>-1.3%</td>
<td>10.5%</td>
<td>10.9%</td>
<td>12.2%</td>
<td>-5.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.1%</td>
<td>0.0%</td>
<td>2.8%</td>
<td>3.4%</td>
<td>2.1%</td>
<td>1.8%</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>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>0.2%</td>
<td>-0.2%</td>
<td>2.8%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>2.1%</td>
<td>1.4%</td>
<td>1.1%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>
Chain Store Sales Dipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050223b.jpg" width="353">
Chain store sales dipped 0.1% last week and reversed the prior week&#39;s up tick according to the International Council of Shopping Centers (ICSC)-UBS survey.
Sales in February are 0.7% ahead of the January average which rose 0.9% from December.
During the last ten years there has been a 58% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department.
The leading indicator of chain store sales from ICSC fell 0.2 in the latest week (+0.5% y/y).
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">02/19/05</th>
<th scope="col">02/12/05</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>445.6</td>
<td>446.2</td>
<td>1.8%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
Mortgage Applications Off Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050223c.jpg" width="353">
The Mortgage Bankers Association reported that mortgage applications fell another 0.6% last week but slight decline during the last two weeks only tempered earlier gains which lifted the average in February 11.1% above January.
Last week&#39;s decline was due to a 1.3% drop in purchase applications. During the last ten years there has been a 59% correlation between the y/y change in purchase applications and the change in new plus existing home sales. Purchase applications in February are down 0.3% versus January.
Applications to refinance ticked up 0.1% following several weeks of strong gain and in February are 25.6% higher than in January.
The effective interest rate on a conventional 30-year mortgage rose to 5.92% versus 5.75% the prior week. The effective rate on a 15-year mortgage also rose to 5.52% last week.
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>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">02/18/05</th>
<th scope="col">02/11/05</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>727.9</td>
<td>732.3</td>
<td>-14.8%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>417.8</td>
<td>423.3</td>
<td>-1.3%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,532.0</td>
<td>2,530.1</td>
<td>-24.7%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
</html>

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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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

Robert Brusca

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.

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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).

Charts of the Week: Strait Stress

Sandy Batten

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Total retail sales rebounded in February, rising a larger-than-expected 0.6% m/m (+3.7% y/y) following an upwardly revised 0.1% monthly decline in January (previously -0.2% m/m), according to data from the U.S. Census Bureau. The Action Economics Forecast Survey expected a 0.4% monthly increase. Excluding autos, other sales were up 0.5% m/m (+3.6% y/y), the first monthly increase in three months. The Action Economics Forecast Survey looked for a 0.3% m/m increase.

The control group of sales (those categories that the BEA uses to construct PCE in the national accounts) increased 0.5% m/m in February following a 0.2% increase in January. The January/February average for this variable is 2.1% annualized above the Q4 average. In Q4, the control group rose 2.8% saar from Q3. So, today’s figures point to a slight slowdown in PCE growth in the first quarter. Note, however, that the data released today predates the escalation of the conflict between the US/Israel and Iran which has led to a marked rise in gasoline/energy prices. The increase in energy prices to date, if maintained, could stress household finances and thereby significantly slow consumer spending ahead.

Sales of motor vehicles and parts jumped 1.2% m/m in February, their first monthly gain in three months and their largest monthly increase since last July. Furniture sales declined 1.0% m/m in February while sales of electronics and appliances rose 0.5% m/m. Sales of building materials increased 0.4% m/m, their fourth consecutive monthly gain. Sales at health and personal care stores jumped 2.3% m/m, their first monthly gain in five months. Sales at gasoline stations rose 0.9% m/m in February, their third monthly gain in the past four months, ahead of the sharp price increases that occurred in March. Clothing store sales jumped 2.0% m/m, their first monthly increase in three months. Department store sales gained 3.0% m/m, their first monthly increase in four months. Food sales slumped 1.0% m/m in February, their first monthly decline in three months. Sales of nonstore retailers increased 0.7% m/m in February on top of a 1.4% m/m jump in January. Eating out sales rose 0.4% m/m, their first monthly gain in three months.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Total sales increased 0.6% m/m after a 0.1% m/m decline in January
- Excluding autos, sales increase 0.5% m/m in February after having been unchanged in January.
- Sales of the retail control group that is used to construct PCE rose 0.5% m/m in February.

U.S. Retail Sales Rebounded in February

Winnie Tapasanun

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U.S. nonfarm private sector payrolls rose a larger-than-expected 62,000 (0.3% y/y) in March after increases of 66,000 in February (+63,000 initially) and 11,000 in January (unrevised), according to the ADP National Employment Report. The three-month average change was +46,000 in March, up from +38,000 in February and +41,000 in January. The Action Economics Forecast Survey expected a 40,000 increase in March.

Small business hiring (less than 50 employees) climbed a solid 85,000 (0.7% y/y) in March—the ninth straight m/m increase and the largest since August—after a 61,000 gain in February (+60,000 initially), with employment in very small firms (1-19 employees) surging 112,000, the strongest m/m rise since February 2024, and employment in small firms (20-49 employees) down 27,000. Employment at medium-sized firms (50-499 employees) fell 20,000 (-0.4% y/y) in March following a 6,000 decline in February (-7,000 initially) and two consecutive m/m increases. Large business hiring (500+ employees) slipped 4,000 (+1.0% y/y) after an 11,000 February rebound (+10,000 initially).

Service-producing jobs rose 32,000 (0.5% y/y) in March, the 10th straight m/m gain, on top of a 50,000 advance in February (+47,000 initially). March’s rise was led by education & health services (+58,000), followed by information (+16,000), leisure & hospitality (+7,000), financial activities (+4,000), other services (+4,000), and professional & business services (+1,000). To the downside, m/m employment fell in trade, transportation & utilities (-58,000).

Goods-producing employment advanced 30,000 (-0.4% y/y) in March, the biggest m/m increase since October 2022, after a 16,000 rise in February (unrevised). March’s gain was led by construction (+30,000) and natural resources & mining (+11,000), while manufacturing (-11,000) continued to decline.

By region, nonfarm private payroll employment rose m/m in March in the South (+101,000; +0.5% y/y) and West (+16,000; +0.4% y/y). In contrast, employment fell m/m in the Northeast (-29,000; +0.4% y/y) and Midwest (-26,000; -0.1% y/y).

Wage growth for job changers accelerated to a three-month-high 6.6% y/y in March from 6.3% y/y in February, remaining well below a high of 16.1% in April 2022. Wage growth for job stayers held steady at 4.5% y/y for the third consecutive month in March, holding in a narrow 4.4%-4.5% range since April 2025. Pay growth also remained steady in major industries, including financial activities (5.2% y/y), manufacturing (4.9% y/y), construction (4.7% y/y), leisure & hospitality (4.6% y/y), education & health services (4.3% y/y), and professional & business services (4.3% y/y).

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

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- Private payrolls +62K in March, ninth straight m/m gain.
- Hiring increase driven by small businesses (+85K), strongest since August.
- Service-sector jobs up (+32K), led by education & health svs. (+58K) and information (+16K), partly offset by trade, transp. & utilities (-58K).
- Goods-producing jobs up (+30K), driven by construction (+30K).
- Wage growth accelerates y/y for job changers (6.6%, a three-month high) but steady for job stayers (4.5%).

Economy in Brief

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Initial Jobless Insurance Claims Up Modestly

U.S. Durable Goods Orders Lower in January, Trend Strong

U.S. Durable Goods Orders Lower in January, Trend Strong

Mixed Trends in Japanese Sectoral Activity

Mortgage Applications Off Again

Chain Store Sales Dipped

Consumer Prices Rose As Expected

Consumer Prices Rose As Expected