Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070226a.jpg" width="353">
The Socialist Republic of Vietnam released data on industrial production today. The data are not seasonally adjusted and are in terms of 1994 Dongs. The dong is the unit of currency in Vietnam. At the end of January, the exchange rate was 16,035.5 dongs to the U. S. dollar.
Total industrial production was 46,155 billion 1994 dongs in January, down 8.7% from December, 2006, but 23.8% above January, 2006. 31% was produced by the state sector of the economy, 31%, by the non state sector and 38% by the foreign investment sector. Although we have only two years of data, it does appear that production in the non state and foreign investment sectors are growing at the expense of production by the state sector.The year to year change in state production in January was 11.1%, while the year to year changes in the non state and foreign investment production were respectively, 32.6% and 27.0%. The first chart compares industrial production produced in the state sector with that produced by the non state and the foreign investment sectors combined.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070226b.jpg" width="353">
Data were also released on exports and imports. For the two years that data are available Vietnam has been running a deficit on trade in goods. The deficit has declined as can be seen in the second chart that shows imports and exports. Moreover, with the growth in the production in the foreign investment most of which is designed for export, the balance of trade in goods may continue to improve. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">VIETNAM&nbsp;</th>
<th scope="col">Jan&nbsp; 07</th>
<th scope="col">Dec&nbsp; 06</th>
<th scope="col">Jan&nbsp; 06</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production &nbsp;(Bil. 1994 Dongs)</td>
<td>46155</td>
<td>50535</td>
<td>37297</td>
<td>-8.67</td>
<td>23.78</td>
<td>43835</td>
<td>38725</td>
</tr>
<tr>
<td class="firstcol">&nbsp; State</td>
<td>12963</td>
<td>15097</td>
<td>11671</td>
<td>-14.14</td>
<td>11.07</td>
<td>13584</td>
<td>12346</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non State</td>
<td>15699</td>
<td>17366</td>
<td>11837</td>
<td>-9.60</td>
<td>32.63</td>
<td>13677</td>
<td>11918</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Foreign Direct Investment </td>
<td>17493</td>
<td>18071</td>
<td>13779</td>
<td>-3.20</td>
<td>26.95</td>
<td>16573</td>
<td>14461</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign Trade Balance (Bil. US $)</td>
<td>-100</td>
<td>-500</td>
<td>-350</td>
<td>400*</td>
<td>250*</td>
<td>5430</td>
<td>5055</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports</td>
<td>3300</td>
<td>3500</td>
<td>28</td>
<td>-5.71</td>
<td>17.86</td>
<td>38920</td>
<td>31198</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports</td>
<td>3400</td>
<td>4000</td>
<td>3150</td>
<td>-15.00</td>
<td>7.94</td>
<td>44350</td>
<td>36252</td>
</tr>
</tbody>
</table>
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The Socialist Republic of Vietnam released data on industrial production today. The data are not seasonally adjusted and are in terms of 1994 Dongs. The dong is the unit of currency in Vietnam. At the end of January, the exchange rate [...]

Less State and More Private Industrial Production in Vietnam

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/070223a.jpg" width="353">
The number of mass layoff events was up 3.0% in January, according to BLS data reported this morning. These specific layoff incidents are called &quot;mass layoffs&quot; because they involve 50 or more initial claims for unemployment insurance. January&#39;s number, 1,237, was the highest since December 2005, and traces a very mild uptrend from a recent low of 1,073 in February 2006. At the same time, the total number of people filing associated unemployment insurance claims fell in January by 5.6% to 125,368, just 2.2% higher than the average for 2006 as a whole.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070223b.jpg" width="353">
The industrial distribution of these layoffs and unemployment insurance claims follows the recent evolution of other information about the economy. [Note that the data for individual industries are not seasonally adjusted.] For instance, the number of layoff events and the number of people are rising in the wood products industry, a development that would be expected as housing demand contracts. Perhaps also associated with this is a large number of events in the furniture manufacturing industry, the most in four years. The finance sector is also seeing more layoffs, but the absolute level of these remains low. However, not all relevant industries exhibit the expected trend: construction has not recently seen layoffs noticeably higher than the large numbers that usually occur in the winter, and construction payroll employment has held flat.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070223c.jpg" width="353">
The tenuous health of the US auto industry is evident in a rising number of layoff events in transportation equipment manufacturing; this was the largest in December and January since the comparable period of December 2001/January 2002. A related group, fabricated metal products, also shows a hint of upward drift.
In contrast, wholesale and retail trade evidence at least stable employment patterns. Both have among the smallest numbers of December and January layoffs in the 12-year history of these layoff data. Correspondingly, the retail trade sector payrolls have been basically flat for about 18 months, and wholesale trade payrolls are climbing steadily.
These mass layoff data are contained in Haver&#39;s flagship database, USECON. Data are also available by Census regions, divisions and states, including some industry detail for each. These are all carried in the REGIONAL database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Mass Layoffs, SA</th>
<th scope="col">Jan 2007</th>
<th scope="col">Dec 2006</th>
<th scope="col">Nov 2006</th>
<th scope="col">Jan 2006</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2006</td>
<td>2005</td>
<td>2004</td>
</tr>
<tr>
<td class="firstcol">Number of Events</td>
<td>1,237</td>
<td>1,201</td>
<td>1,220</td>
<td>1,112</td>
<td>1,167</td>
<td>1,372</td>
<td>1,332</td>
</tr>
<tr class="odd">
<td class="firstcol">Initial Claims &nbsp; (Number Persons)</td>
<td>126,368</td>
<td>133,818</td>
<td>136,340</td>
<td>109,429</td>
<td>123,699</td>
<td>149,612</td>
<td>133,930</td>
</tr>
</tbody>
</table>
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The number of mass layoff events was up 3.0% in January, according to BLS data reported this morning. These specific layoff incidents are called "mass layoffs" because they involve 50 or more initial claims for unemployment insurance. [...]

Mass Layoff Events Increase in January, But the Number of People Involved Decreases

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222e.jpg" width="353">
The Bank of Japan raised short-term interest rates by 25 basis points yesterday &quot;effective immediately&quot;. As seen in the first graph here, money markets began to factor this change into their trading last Friday, when the key policy target rate, the uncollateralized overnight call rate, moved up about 10 basis points from 0.260% to 0.362%. It stayed near there through the close of markets yesterday. Today, it moved on up, reaching 0.528% on a provisional basis; the Bank wants it to hover around 0.50%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222f.jpg" width="353">
The BoJ decision is based on two main forward-looking criteria: the Bank sees a reduction in uncertainty over the outlook for Japan&#39;s economy, and it is concerned that markets not get complacent about accommodative monetary policy.
As mentioned specifically in the Bank&#39;s policy statement, consumer spending in Japan had weakened last summer, but the reports last week of Q4 data show a distinct rebound. As we described here a week ago, total GDP was up 1.2% in Q4 (4.8% annual rate) following a mere 0.3% in Q3. Household consumption had fallen at a 4.3% rate in Q3 and came back at a 4.5% pace in Q4. All four major types of expenditure participated in the gain: durables, semi-durables, nondurables and services. The Bank was also <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222g.jpg" width="353"> reassured, it said, by reduced uncertainty abroad, especially in the US. Further, today, more evidence of rising demand abroad and its favorable impact for Japan came in the January trade data. Exports were up 3.3% from December, the largest monthly increase since the Spring of 2004. Sales to China were strongest on a year-over-year basis, but shipments to other Asian and Middle Eastern trading partners also showed notable growth.
These favorable demand developments are promoting gains in usage of resources in Japan, noted by the Bank as sources of price pressure &quot;over the longer term&quot;, precisely what concerns it most. As seen in the final graph, industrial capacity utilization in manufacturing reached 109.3 in December (2000=100), the highest since late 1991. Unemployment has steadied, hovering just above 4%. All of 2006 averaged 4.1%, the lowest yearly figure since 1998.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222h.jpg" width="353">

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The Bank of Japan raised short-term interest rates by 25 basis points yesterday "effective immediately". As seen in the first graph here, money markets began to factor this change into their trading last Friday, when the key policy [...]

Bank of Japan Raises Call Rate Target to 0.50%; Cites Demand Growth & High Industry Operating Rate

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222c.jpg" width="353">
The Conference Board reported that its Index of Help-Wanted Advertising in January fell to 32 from an upwardly revised 34 in December.
During the last ten years there has been a 57% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume, however, halved to 39% from an upwardly revised 80% during December. In spite of the latest decline, the three month moving average of the indicator at 53% remained much improved from last year.
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>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January &#39;06</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>32</td>
<td>34</td>
<td>38</td>
</tr>
</tbody>
</table>
</body>
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The Conference Board reported that its Index of Help-Wanted Advertising in January fell to 32 from an upwardly revised 34 in December. During the last ten years there has been a 57% correlation between the level of help-wanted [...]

Help-Wanted Advertising Off

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222a.jpg" width="353">
Initial unemployment insurance claims fell 27,000 to 332,000 after a revised 46,000 increase the week prior. The figure fell short of Consensus expectations for a decline to 325,000 claims.
During the last ten years there has been a (negative) 77% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The figure covers the survey period for February nonfarm payrolls and claims rose 45,000 (15.7%) from the January period.
The four-week moving average of initial claims rose to 328,000 (11.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222b.jpg" width="353">
A 45,000 drop in continuing claims for unemployment insurance reversed most of a revised 65,000 jump the week prior.
The insured rate of unemployment remained at 1.9%, about where it&#39;s been since February.
A Currency at Home and Abroad from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20070301/cover.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">02/17/07</th>
<th scope="col">02/10/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>332</td>
<td>359</td>
<td>14.9%</td>
<td>313</td>
<td>332</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Continuing Claims</td>
<td>--</td>
<td>2,509</td>
<td>0.4%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial unemployment insurance claims fell 27,000 to 332,000 after a revised 46,000 increase the week prior. The figure fell short of Consensus expectations for a decline to 325,000 claims. During the last ten years there has been a [...]

Initial Claims for Jobless Insurance Down Less Than Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222a.jpg" width="353">
Initial unemployment insurance claims fell 27,000 to 332,000 after a revised 46,000 increase the week prior. The figure fell short of Consensus expectations for a decline to 325,000 claims.
During the last ten years there has been a (negative) 77% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The figure covers the survey period for February nonfarm payrolls and claims rose 45,000 (15.7%) from the January period.
The four-week moving average of initial claims rose to 328,000 (11.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222b.jpg" width="353">
A 45,000 drop in continuing claims for unemployment insurance reversed most of a revised 65,000 jump the week prior.
The insured rate of unemployment remained at 1.9%, about where it&#39;s been since February.
A Currency at Home and Abroad from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20070301/cover.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">02/17/07</th>
<th scope="col">02/10/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>332</td>
<td>359</td>
<td>14.9%</td>
<td>313</td>
<td>332</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Continuing Claims</td>
<td>--</td>
<td>2,509</td>
<td>0.4%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Off 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 22, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070222c.jpg" width="353">
The Conference Board reported that its Index of Help-Wanted Advertising in January fell to 32 from an upwardly revised 34 in December.
During the last ten years there has been a 57% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume, however, halved to 39% from an upwardly revised 80% during December. In spite of the latest decline, the three month moving average of the indicator at 53% remained much improved from last year.
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>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January &#39;06</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>32</td>
<td>34</td>
<td>38</td>
</tr>
</tbody>
</table>
</body>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070221f.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales slipped for the third week in the last four. The 0.1% decline last week lowered sales so far this month to a level that is all of 0.1% ahead of January after the 2.8% gain that month.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
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.
The leading indicator of chain store sales from ICSC-UBS fell sharply for the third week in the last four, by 1.1% (-0.2% y/y).

<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">2/17/07</th>
<th scope="col">2/10/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>478.1</td>
<td>478.7</td>
<td>3.5%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


</html>

The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales slipped for the third week in the last four. The 0.1% decline last week lowered sales so far this month to a level that is all of 0.1% [...]

Weekly Chain Store Sales Slipped Again

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: February 2007

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