Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041028c.jpg" width="353">
The National Index of Help-Wanted Advertising published by the Conference Board fell to 36 in September, the lowest level since May of last year.
The proportion of labor markets with rising want-ad volume plunged to 25%, half the prior month&#39;s level and the lowest since March.
During the last ten years there has been an 89% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
Recent weakness in help wanted indicates that most, if not all, of the improvement in non-farm payroll growth has been due to fewer job losses, not improved hiring and explains why the recent three month growth in payrolls of 0.9% is well below the growth which characterized other US economic recovery periods.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col"> Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;03</th>
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<tbody>
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<td class="firstcol">National Help Wanted Index</td>
<td>36</td>
<td>37</td>
<td>37</td>
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The National Index of Help-Wanted Advertising published by the Conference Board fell to 36 in September, the lowest level since May of last year. The proportion of labor markets with rising want-ad volume plunged to 25%, half the [...]

Help-Wanted Advertising Down Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041028b.jpg" width="353">
Initial claims for unemployment insurance last week recouped most of the prior period&#39;s decline with a 20,000 rise to 350,000 following a 25,000 decline that was little revised. The Consensus expectation had been for 340,000 claims.
During the last ten years there has been a (negative) 73% correlation between the level of initial claims and the m/m change in payroll employment.
The 4-week moving average of initial claims fell to 343,250 (-11.6% y/y).
Continuing claims for unemployment insurance rose 38,000 after sharp declines during five of the prior six weeks.
The insured rate of unemployment remained at 2.2% for the third week.

<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"> 10/23/04</th>
<th scope="col"> 10/16/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
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<td class="firstcol">Initial Claims</td>
<td>350</td>
<td>330</td>
<td>-9.3%</td>
<td>402</td>
<td>404</td>
<td>406</td>
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<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,823</td>
<td>-19.5%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
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</tbody>
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Initial claims for unemployment insurance last week recouped most of the prior period's decline with a 20,000 rise to 350,000 following a 25,000 decline that was little revised. The Consensus expectation had been for 340,000 claims. [...]

Initial Jobless Insurance Claims Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041028b.jpg" width="353">
Initial claims for unemployment insurance last week recouped most of the prior period&#39;s decline with a 20,000 rise to 350,000 following a 25,000 decline that was little revised. The Consensus expectation had been for 340,000 claims.
During the last ten years there has been a (negative) 73% correlation between the level of initial claims and the m/m change in payroll employment.
The 4-week moving average of initial claims fell to 343,250 (-11.6% y/y).
Continuing claims for unemployment insurance rose 38,000 after sharp declines during five of the prior six weeks.
The insured rate of unemployment remained at 2.2% for the third week.

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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"> 10/23/04</th>
<th scope="col"> 10/16/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
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<td class="firstcol">Initial Claims</td>
<td>350</td>
<td>330</td>
<td>-9.3%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,823</td>
<td>-19.5%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 28, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041028c.jpg" width="353">
The National Index of Help-Wanted Advertising published by the Conference Board fell to 36 in September, the lowest level since May of last year.
The proportion of labor markets with rising want-ad volume plunged to 25%, half the prior month&#39;s level and the lowest since March.
During the last ten years there has been an 89% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
Recent weakness in help wanted indicates that most, if not all, of the improvement in non-farm payroll growth has been due to fewer job losses, not improved hiring and explains why the recent three month growth in payrolls of 0.9% is well below the growth which characterized other US economic recovery periods.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col"> Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;03</th>
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<td class="firstcol">National Help Wanted Index</td>
<td>36</td>
<td>37</td>
<td>37</td>
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</table>
New Home Sales Higher Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 28, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041028a.jpg" width="353">
Sales of new single-family homes rose 3.5% in September to 1.206M, the highest level since May. Consensus estimates had been for sales of 1.150M. 
Sales rose in each of the country&#39;s regions except the West where a 0.8% (+9.1% y/y) decline followed a 10.1% August jump. In the South sales rose 2.7% (4.3% y/y) and in the Northeast sales rose 6.0% (-19.3% y/y). Sales in the Midwest jumped 12.3% (22.7% y/y).
The median price of a new single family home fell 8.4% m/m to $197,700 (3.0% y/y).

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM"> Homes Sales (000s, AR)</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">New Single-Family</td>
<td>1,206</td>
<td>1,165</td>
<td>7.0%</td>
<td>1,089</td>
<td>976</td>
<td>907</td>
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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/041027a.jpg" width="353">
September durable goods orders continued to be pushed around by the aircraft sector. Orders in that volatile industry fell back for a second month after their spike in June and July. Total durable goods orders turned up 0.2% following August&#39;s 0.6% fall; machinery and high tech equipment were mainly responsible for the advance.
Nondefense capital goods orders managed a 0.6% increase in September. Excluding the decline in commercial aircraft, they were up a notable 2.6%. This was the fourth consecutive monthly gain in that segment and extended a generally rising trend that began early in 2003.
Shipments, after a good gain of 1.9% in August, dropped back 1.2% last month. The distribution was mixed among industries and categories. With the decline in shipments, the backlog of unfilled orders rose 0.7%. A simple ratio of the backlog to shipments in industries that have unfilled orders stands at almost 4.0 months. This is not high by recent standards, but indicates a stabilization after a two-and-a-half year downtrend.
Inventories of durable goods rose 0.3% (6.3% y/y) moderating further after July&#39;s 1.1% spike and August&#39;s sizable 0.8% rise.

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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">Sept</th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Durable Goods Orders</td>
<td>0.2%</td>
<td>-0.6%</td>
<td>1.9%</td>
<td>9.3%</td>
<td>3.0%</td>
<td>-1.9%</td>
<td>-10.6%</td>
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<tr>
<td class="firstcol">Nondefense Capital Goods</td>
<td>0.6%</td>
<td>-7.2%</td>
<td>9.3%</td>
<td>8.5%</td>
<td>6.4%</td>
<td>-7.4%</td>
<td>-15.8%</td>
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<td class="firstcol">Excluding Aircraft</td>
<td>2.6%</td>
<td>0.3%</td>
<td>0.6%</td>
<td>7.5%</td>
<td>2.8%</td>
<td>-6.4%</td>
<td>-10.5%</td>
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September durable goods orders continued to be pushed around by the aircraft sector. Orders in that volatile industry fell back for a second month after their spike in June and July. Total durable goods orders turned up 0.2% following [...]

U.S. Durable Goods Orders Turn Up, Helped by Machinery & Computers

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041026e.jpg" width="353">
The fourth quarter survey of industrial trends in the United Kingdom undertaken by the Confederation of Business Industries (CBI) revealed a sharp increase in pessimism among the 770 manufacturers participating in the survey. The CBI publishes the percent balance between those respondents who have a positive outlook and those who have a negative outlook on a number of business issues.
There were 10% more pessimists regarding domestic prospects than optimists in the latest survey. This compares with an excess of optimists of 7% in the third quarter survey. The pessimists and optimists were equally balanced regarding the outlook for exports in the fourth quarter survey, compared with an excess of optimists of 3% in the previous quarter.
One bright spot in the survey is the outlook for output over the next three months. In spite of the decline in optimism and a one percentage point drop in the balance, 6% more respondents increased rather than decreased output over the past three months and the balance of those expecting to increase over those expecting to lower output in the next three months rose to 14% from 6% in the third quarter..
In contrast to the optimism among manufacturers regarding output over the next three months is the pessimism regarding the outlook for capital spending and employment. The balance between those who expect to increase over those who expect to decrease spending on buildings has gone from -16 in the third quarter to -26 in the fourth. The comparable balances for spending on plant and equipment are 0 and -17. Furthermore, the balance between those who expect to increase over those intending to decrease employment in the next three months was -15 in the fourth quarter, compared to -7 in the third quarter.
In the first quarter of this year, the balance of those expecting prices to rise over those expecting them to fall was, for the first time since early 2001, greater than the balance of those expecting costs to rise over those expecting them to fall, suggesting that the respondents to the survey were looking forward to better profit trends. This relationship was, however, short lived and once more the balance of those predicting an increase over those predicting a decrease in costs is greater than the balance of those predicting a rise over those predicting a fall in prices. The trends are shown in the attached chart.

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<th scope="col" class="firstcol">CBI SURVEY&nbsp; (Percent Balances)</th>
<th scope="col">Q4 04</th>
<th scope="col">Q3&nbsp;04</th>
<th scope="col">Q4 03</th>
<th scope="col">Q/Q Pt Chg</th>
<th scope="col">Y/Y&nbsp; Pt Chg</th>
<th scope="col">2004</th>
<th scope="col">2003&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2002&nbsp;</th>
<th scope="col">&nbsp; 2001&nbsp;</th>
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<tbody>
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<td class="firstcol">Business Optimism Domestic</td>
<td>-10</td>
<td>7</td>
<td>-7</td>
<td>-17</td>
<td>-3</td>
<td>7</td>
<td>-17</td>
<td>-6</td>
<td>-27</td>
</tr>
<tr>
<td class="firstcol">Business Optimism Exports</td>
<td>0</td>
<td>3</td>
<td>-8</td>
<td>-3</td>
<td>8</td>
<td>7</td>
<td>-15</td>
<td>-6</td>
<td>-22</td>
</tr>
<tr class="odd">
<td class="firstcol">Output, past three months</td>
<td>6</td>
<td>7</td>
<td>-19</td>
<td>-1</td>
<td>25</td>
<td>11</td>
<td>-12</td>
<td>-13</td>
<td>-4</td>
</tr>
<tr>
<td class="firstcol">Output, next three months</td>
<td>14</td>
<td>6</td>
<td>-4</td>
<td>8</td>
<td>18</td>
<td>13</td>
<td>-4</td>
<td>5</td>
<td>-2</td>
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<tr class="odd">
<td class="firstcol">Domestic Prices, next three months</td>
<td>1</td>
<td>6</td>
<td>-7</td>
<td>-5</td>
<td>8</td>
<td>3</td>
<td>-10</td>
<td>-13</td>
<td>-12</td>
</tr>
<tr>
<td class="firstcol">Unit Cost, next three months</td>
<td>14</td>
<td>13</td>
<td>-2</td>
<td>1</td>
<td>16</td>
<td>7</td>
<td>-1</td>
<td>-7</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital Expenditures, buildings</td>
<td>-26</td>
<td>-16</td>
<td>-29</td>
<td>-10</td>
<td>3</td>
<td>-18</td>
<td>-29</td>
<td>-26</td>
<td>-24</td>
</tr>
<tr>
<td class="firstcol">Capital Expenditures, plant &amp; equip</td>
<td>-17</td>
<td>0</td>
<td>-14</td>
<td>-17</td>
<td>-3</td>
<td>-3</td>
<td>-21</td>
<td>-23</td>
<td>-15</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment, past three months</td>
<td>-4</td>
<td>2</td>
<td>-21</td>
<td>-6</td>
<td>17</td>
<td>-6</td>
<td>-25</td>
<td>-31</td>
<td>-15</td>
</tr>
<tr>
<td class="firstcol">Employment, next three months</td>
<td>-15</td>
<td>-7</td>
<td>-26</td>
<td>-8</td>
<td>11</td>
<td>-11</td>
<td>-28</td>
<td>-26</td>
<td>-21</td>
</tr>
</tbody>
</table>
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The fourth quarter survey of industrial trends in the United Kingdom undertaken by the Confederation of Business Industries (CBI) revealed a sharp increase in pessimism among the 770 manufacturers participating in the survey. The CBI [...]

Pessimism Among U. K. Manufacturers Rises in the Fourth Quarter

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041026c.jpg" width="353">
Chain store sales fell another 0.6% last week and added to the 0.2% slip the prior period, according to the International Council of Shopping Centers (ICSC)-UBS.
The decline dropped sales so far in October 0.2% below the September average which fell 0.7% versusAugust.
During the last ten years there has been a 60% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales 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">10/23/04</th>
<th scope="col">10/16/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>433.9</td>
<td>436.4</td>
<td>3.7%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
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Chain store sales fell another 0.6% last week and added to the 0.2% slip the prior period, according to the International Council of Shopping Centers (ICSC)-UBS. The decline dropped sales so far in October 0.2% below the September [...]

U.S. Chain Store Sales Down Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041026b.jpg" width="353">
The average price for unleaded regular gasoline rose to $2.03 per gallon last week and has averaged $2.00 so far this month.
The inflation adjusted &quot;real&quot; price of gasoline remained well below the early 1981 peak, but the roughly 50% increase during the last two years rivals the gain leading to the prior peak.
Crude oil prices also rose further. The price of West Texas Intermediate crude surged yesterday to $55.23 per barrel versus $53.29/bbl. averaged last week and $45.95 in September.
Wholesale natural gas prices also rose yesterday to $7.12/mmbtu (+55.8% y/y) and have averaged $5.96 in October versus $4.98 in September.
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>.
&quot;Monetary Policy and Inflation Dynamics&quot; from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2004/200462/200462abs.html">here.</a>

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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">10/19/04</th>
<th scope="col">12/31/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.03</td>
<td>$1.48</td>
<td>31.8%</td>
<td>$1.56</td>
<td>$1.35</td>
<td>$1.42</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$53.29</td>
<td>$32.55</td>
<td>76.6%</td>
<td>$32.78</td>
<td>$31.23</td>
<td>$19.38</td>
</tr>
</tbody>
</table>
</body>
</html>

The average price for unleaded regular gasoline rose to $2.03 per gallon last week and has averaged $2.00 so far this month. The inflation adjusted "real" price of gasoline remained well below the early 1981 peak, but the roughly 50% [...]

Gasoline Above $2.00/gal. & Crude Oil Topped $50/bbl.

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

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High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

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The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

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The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

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- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

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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- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

Economy in Brief: October 2004

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Help-Wanted Advertising Down Again

Initial Jobless Insurance Claims Rose

Initial Jobless Insurance Claims Rose

U.S. Durable Goods Orders Turn Up, Helped by Machinery & Computers

U.S. Durable Goods Orders Turn Up, Helped by Machinery & Computers

Pessimism Among U. K. Manufacturers Rises in the Fourth Quarter

U.S. Chain Store Sales Down Again

Gasoline Above $2.00/gal. & Crude Oil Topped $50/bbl.