Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223b.jpg" width="353">
Mass layoffs in January reversed all of the prior month&#39;s revised increase and fell 27.5%. The decline in the number of mass layoff events was to the lowest level since October, 2000.
During the last ten years there has been a (negative) 87% correlation between the three month average level of layoff announcements and the y/y change in payroll employment.
The number of persons affected in December by mass layoffs also fell sharply. The 27.5% m/m decline similarly reversed all of December&#39;s gain as layoffs in the construction industry plummeted (-76.4% y/y) with record warm temperatures. The number of affected workers in the factory sector also fell sharply (-49.7% y/y) and industry declines were widespread.
The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period

<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">Mass Layoffs</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All US Industries (# Events, SA)</td>
<td>1,113</td>
<td>1,308</td>
<td>-24.0%</td>
<td>15,670</td>
<td>15,877</td>
<td>19,155</td>
</tr>
<tr>
<td class="firstcol">Total (# Persons, SA)</td>
<td>108,378</td>
<td>149,565</td>
<td>-29.5%</td>
<td>1,717,119</td>
<td>1,589,446</td>
<td>1,936,463</td>
</tr>
</tbody>
</table>
</body>
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Mass layoffs in January reversed all of the prior month's revised increase and fell 27.5%. The decline in the number of mass layoff events was to the lowest level since October, 2000. During the last ten years there has been a [...]

Mass Layoffs Lowest Since 2000

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223c.jpg" width="353">
The Index of Help-Wanted Advertising from the Conference Board fell to 37 from a revised level of 38 in December. The decline was to the lower end of a range between 37 and 40 in place since the Spring of last year.
During the last ten years there has been a 62% 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 similarly fell back to 51 though that remained slightly improved versus last year&#39;s average.
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>.
Turbulent Firms, Turbulent Wages? from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr238.pdf"> here</a>.

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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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Jan &#39;05</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>38</td>
<td>42</td>
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</tbody>
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The Index of Help-Wanted Advertising from the Conference Board fell to 37 from a revised level of 38 in December. The decline was to the lower end of a range between 37 and 40 in place since the Spring of last year. During the last [...]

Help-Wanted Advertising Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223a.jpg" width="353">
Initial unemployment insurance claims for dropped 20,000 to 278,000 last week. The decline reversed all of the prior week&#39;s increase which was slightly revised. Consensus expectations had been for 298,000 claims.
The latest figure covers the survey period for February nonfarm payrolls and claims were up 6,000 (2.2%) from the January period.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims rose to 281,750 (-8.8% y/y).
Continuing unemployment insurance claims rose 41,000 and reversed nearly half of the prior week&#39;s revised 98,000 decline which was much deeper than initially estimated.
The insured rate of unemployment was stable at 1.9% for the third of the last four weeks.
A new study titled Globalization and Offshoring of Software by the Association for Computing Machinery can be found <a href="http://www.acm.org/globalizationreport/summary.htm"> 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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">02/18/06</th>
<th scope="col">02/11/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>278</td>
<td>298</td>
<td>-10.0%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,495</td>
<td>-5.4%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
</body>
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Initial unemployment insurance claims for dropped 20,000 to 278,000 last week. The decline reversed all of the prior week's increase which was slightly revised. Consensus expectations had been for 298,000 claims. The latest figure [...]

Initial Claims for Jobless Insurance Back Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223a.jpg" width="353">
Initial unemployment insurance claims for dropped 20,000 to 278,000 last week. The decline reversed all of the prior week&#39;s increase which was slightly revised. Consensus expectations had been for 298,000 claims.
The latest figure covers the survey period for February nonfarm payrolls and claims were up 6,000 (2.2%) from the January period.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims rose to 281,750 (-8.8% y/y).
Continuing unemployment insurance claims rose 41,000 and reversed nearly half of the prior week&#39;s revised 98,000 decline which was much deeper than initially estimated.
The insured rate of unemployment was stable at 1.9% for the third of the last four weeks.
A new study titled Globalization and Offshoring of Software by the Association for Computing Machinery can be found <a href="http://www.acm.org/globalizationreport/summary.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">02/18/06</th>
<th scope="col">02/11/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>278</td>
<td>298</td>
<td>-10.0%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,495</td>
<td>-5.4%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Dipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 23, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223c.jpg" width="353">
The Index of Help-Wanted Advertising from the Conference Board fell to 37 from a revised level of 38 in December. The decline was to the lower end of a range between 37 and 40 in place since the Spring of last year.
During the last ten years there has been a 62% 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 similarly fell back to 51 though that remained slightly improved versus last year&#39;s average.
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>.
Turbulent Firms, Turbulent Wages? from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr238.pdf"> here</a>.

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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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Jan &#39;05</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>38</td>
<td>42</td>
</tr>
</tbody>
</table>
Mass Layoffs Lowest Since 2000 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 23, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223b.jpg" width="353">
Mass layoffs in January reversed all of the prior month&#39;s revised increase and fell 27.5%. The decline in the number of mass layoff events was to the lowest level since October, 2000.
During the last ten years there has been a (negative) 87% correlation between the three month average level of layoff announcements and the y/y change in payroll employment.
The number of persons affected in December by mass layoffs also fell sharply. The 27.5% m/m decline similarly reversed all of December&#39;s gain as layoffs in the construction industry plummeted (-76.4% y/y) with record warm temperatures. The number of affected workers in the factory sector also fell sharply (-49.7% y/y) and industry declines were widespread.
The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period

<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">Mass Layoffs</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All US Industries (# Events, SA)</td>
<td>1,113</td>
<td>1,308</td>
<td>-24.0%</td>
<td>15,670</td>
<td>15,877</td>
<td>19,155</td>
</tr>
<tr>
<td class="firstcol">Total (# Persons, SA)</td>
<td>108,378</td>
<td>149,565</td>
<td>-29.5%</td>
<td>1,717,119</td>
<td>1,589,446</td>
<td>1,936,463</td>
</tr>
</tbody>
</table>
German Ifo Surprises on the Upside, Reaches Highest in Nearly 15 Years 
by <a href="/comment/Stone.html">Carol Stone</a> February 23, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223d.jpg" width="353">
Germany&#39;s Ifo Business Climate survey continued and spread the better news about European industry which has been flowing out this week. After a surprisingly good result in January, forecasters expected that the February Ifo index would retreat a bit. But it added another 1.3 points to the 2000-based index, bringing the level to 103.3, the highest since July 1991. The accompanying diffusion measure rose to +5.8%, its best since October 1991.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223e.jpg" width="353">
The improvement was visible in both current conditions and expectations. The &quot;Business Situation&quot; measure of current activity &quot;rose&quot; to -0.3% for February from -4.5% last month and -15.5% a year ago. Expectations, usually higher than current conditions (but not always) and tending to lead (by about 4 months, as seen in the graph) have been positive in four of the last five months and reached +12% in February, their strongest since late 1994. The leading tendency suggests that the improvement in the business climate should continue in coming months.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060223f.jpg" width="353">
All major sectors participated in February&#39;s advance: manufacturing, already indicating a net expansion for many months, reached +14.9%, the best level in six years. Construction and retailing activity are still well in negative territory, but have improved dramatically, nonetheless: retailing stands at -7.0% compared with -28.7% a year ago and construction was &quot;only&quot; -20.5%, compared with -42.9% a year ago. This last, while the weakest sector overall, is perhaps most impressive. If prospects for construction activity are looking better, that likely reflects business leaders&#39; belief that the progress in other sectors will justify at least some expansion and/or modernization of facilities. The better outlook in retailing also suggests that those business executives see relative improvements in consumer spending. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/@D8/@D81/@D81.HTM">Germany </a><a href="http://www.haverselect.com/dlx/GERMANY/@D8/@D81/@D81.HTM">(SA)</a></th>
<th scope="col">Feb 2006</th>
<th scope="col">Jan 2006</th>
<th scope="col">Dec 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Ifo Business Climate Index, &nbsp; 2000 = 100</td>
<td>103.3</td>
<td>101.8</td>
<td>99.6</td>
<td>95.2</td>
<td>95.5</td>
<td>95.5</td>
<td>91.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Diffusion %</td>
<td>+5.8</td>
<td>+2.6</td>
<td>-1.7</td>
<td>-10.3</td>
<td>-9.8</td>
<td>-10.0</td>
<td>-17.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing: Diffusion %</td>
<td>+14.9</td>
<td>+13.6</td>
<td>+8.9</td>
<td>+2.5</td>
<td>+1.1</td>
<td>+4.4</td>
<td>-7.9</td>
</tr>
<tr>
<td class="firstcol">Construction: Diffusion %</td>
<td>-20.5</td>
<td>-22.1</td>
<td>-29.8</td>
<td>-42.9</td>
<td>-37.4</td>
<td>-42.6</td>
<td>-42.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Situation: Diffusion %</td>
<td>-0.3</td>
<td>-4.5</td>
<td>-6.3</td>
<td>-15.5</td>
<td>-14.2</td>
<td>-17.4</td>
<td>-27.2</td>
</tr>
<tr>
<td class="firstcol">Business Expectations: Diffusion %</td>
<td>+12.0</td>
<td>+10.8</td>
<td>+3.0</td>
<td>-5.0</td>
<td>-5.2</td>
<td>-2.2</td>
<td>-6.7</td>
</tr>
</tbody>
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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/060222d.jpg" width="353">
Yesterday in this space, Louise Curley noted a &quot;stunning&quot; rise in new orders at French factories in Q4 2005. That commentary followed a similar sentiment about orders in Italy for December, which were reported Monday. Now today, Eurostat tells that new orders for the Euro-Zone as a whole closed out 2005 with two upbeat months. Total orders gained 4.6% in November and 5.0% in December (month-on-month, seasonally adjusted). Foreign orders rose 9.5% in November and 8.8% in December. For the year as a whole, foreign orders were 9.0% higher than in 2004 while total orders were up 4.8%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060222e.jpg" width="353">
The results of France INSEE&#39;s monthly business survey hint of further improvement early this year. Total orders had diffusion index readings of -12 and -8 in January and February, respectively, a far cry from the -20 range that prevailed in mid-2005. Export orders ran up from -5 in January to +8 in February, the first positive reading since March 2001. The anticipated trend in industrial production is hovering just below zero, also much less weak than the -26 found in June of 2005 and the -12 average for the year.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060222f.jpg" width="353">
Across the Channel, the UK also still sees more firms with falling orders than rising, according to the Confederation of British Industry monthly survey, but these negative numbers are diminishing. February&#39;s total orders stood at -18, compared with -28 in January and a -21 average for all of last year. Export orders fell back from -10 in January to -17 in February, but they had stood at -23 in December and had also averaged -21 for all of 2005. Expectations for near-term output show it at +10, the highest monthly reading since February 2005.
The trends in these factory prospects look uneven and the still sluggish domestic sectors disappointing. But persistent gains in exporting can help turn that around. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Feb 2006</th>
<th scope="col">Jan 2006</th>
<th scope="col">Dec 2005</th>
<th scope="col">Nov 2005</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone Total Orders (% Change)</td>
<td>--</td>
<td>--</td>
<td>5.0</td>
<td>4.6</td>
<td>4.8</td>
<td>6.1</td>
<td>0.1</td>
</tr>
<tr>
<td class="firstcol">Foreign Orders (% Change)</td>
<td>--</td>
<td>--</td>
<td>8.8</td>
<td>9.5</td>
<td>9.0</td>
<td>7.9</td>
<td>0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">France INSEE Survey, Industrial Production Trend </td>
<td>-3</td>
<td>0</td>
<td>-2</td>
<td>0</td>
<td>-12</td>
<td>5</td>
<td>-29</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Export Orders</td>
<td>8</td>
<td>-5</td>
<td>-9</td>
<td>-7</td>
<td>-14</td>
<td>-10</td>
<td>-21</td>
</tr>
<tr class="odd">
<td class="firstcol">UK CBI Survey Orders</td>
<td>-18</td>
<td>-28</td>
<td>-22</td>
<td>-25</td>
<td>-21</td>
<td>-9</td>
<td>-29</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Export Orders</td>
<td>-17</td>
<td>-10</td>
<td>-23</td>
<td>-13</td>
<td>-21</td>
<td>-13</td>
<td>-33</td>
</tr>
<tr class="odd">
<td class="firstcol">Output Next 3 Months</td>
<td>10</td>
<td>1</td>
<td>-4</td>
<td>-4</td>
<td>4</td>
<td>12</td>
<td>-3</td>
</tr>
</tbody>
</table>
</body>
</html>

Yesterday in this space, Louise Curley noted a "stunning" rise in new orders at French factories in Q4 2005. That commentary followed a similar sentiment about orders in Italy for December, which were reported Monday. Now today, [...]

Better Manufacturing Sector Prospects in Europe and the UK

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060222c.jpg" width="353">
Chain store sales last week recovered half of the prior period&#39;s drop with a 0.2% advance, according to the International Council of Shopping Centers (ICSC)-UBS survey.
Because a sharp 2.0% jump during the opening week of the month, sales so far in February are 0.7% ahead of the January average which rose 1.0% from December.
The leading indicator of chain store sales fell for the third consecutive week and the 0.4% w/w decline lowered the February level 1.6% below the January average.
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%">
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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">02/18/06</th>
<th scope="col">02/11/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>461.9</td>
<td>460.9</td>
<td>3.7%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


</html>

Chain store sales last week recovered half of the prior period's drop with a 0.2% advance, according to the International Council of Shopping Centers (ICSC)-UBS survey. Because a sharp 2.0% jump during the opening week of the month, [...]

Chain Store Sales Recovered Some

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060222b.jpg" width="353">
The total number of mortgage applications inched 0.8% last week after three consecutive weeks of sharp decline. The average level of applications this month is down 5.6% from January.
Purchase applications recovered 4.3% following three weeks of sharp decline. The average level of purchase applications in February is down 9,8% from the January average.
During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Moving in the other direction last week, applications to refinance fell 4.0% w/w and this month&#39;s average is off 0.8% from January.
The effective interest rate on a conventional 30-year mortgage dipped to 6.47% versus an average 6.34% in January. The effective rate on a 15-year mortgage also dipped to 6.18% versus an average 5.98% last month. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities and during the last ten years there has been a (negative) 82% correlation between purchase applications and the effective rate on a 30-Year mortgage.
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%">
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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">02/17/06</th>
<th scope="col">02/10/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>578.5</td>
<td>574.1</td>
<td>-20.5%</td>
<td>708.6</td>
<td>735.1</td>
<td>1,067.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>408.7</td>
<td>391.7</td>
<td>-2.2%</td>
<td>470.9</td>
<td>454.5</td>
<td>395.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,571.4</td>
<td>1,636.7</td>
<td>-37.9%</td>
<td>2,092.3</td>
<td>2,366.8</td>
<td>4,981.8</td>
</tr>
</tbody>
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The total number of mortgage applications inched 0.8% last week after three consecutive weeks of sharp decline. The average level of applications this month is down 5.6% from January. Purchase applications recovered 4.3% following [...]

Mortgage Applications Inched Up

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The 0.7% gain in the January consumer price index (CPI-U) was the strongest for any month since last September and lifted the y/y gain to a firm 4.0%. Consensus expectations had been for a 0.5% m/m rise.
Energy prices ballooned 5.0% as gasoline prices rose 6.4% (27.4% y/y) and electricity prices surged 5.5% (15.1% y/y). The price charged by utilities for natural gas (34.5% y/y) also rose but both in January &amp; February the spot market price for gas fell sharply. The average retail price paid for gasolinealso fell in February to $2.29 per gallon from $2.32 during January.
The 0.5% jump in food prices was the strongest for any month since last April and reflected a 1.7% (6.3% y/y) surge in fruits &amp; vegetables as well as 0.5% increases in the prices of cereals (1.4% y/y) and dairy products (0.3% y/y).
Prices less food &amp; energy rose a moderate 0.2% and matched Consensus expectations. Prices for core goods and for core services both rose 0.2%.
Apparel prices (-1.0% y/y) recovered 0.3% after a like decline during December and new vehicle prices rose 0.6% (-0.4% y/y) after two down months. Furniture &amp; bedding prices (0.4% y/y) fell slightly as did appliance prices (+1.9% y/y). Medical care commodity prices doubled the December increase and rose 0.4% (3.8% y/y).
The 0.2% increase in core services prices was held back by an unchanged level of medical care services prices (4.1% y/y) but school tuition &amp; fees jumped 0.7% (6.4% y/y). Shelter prices inched up 0.1% (2.5% y/y) while public transportation prices surged 1.3% (7.5% y/y).
The chained CPI which adjusts for shifts in the mix of consumer purchases jumped 0.7%. Less food &amp; energy prices rose a moderate 0.3%.
The minutes of the latest meeting of the Federal Open Market Committee can be found <a href="http://www.federalreserve.gov/fomc/minutes/20060131.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@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">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>4.0%</td>
<td>3.4%</td>
<td>2.7%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.1%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.5%</td>
<td>-0.9%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.3%</td>
<td>2.9%</td>
<td>2.8%</td>
<td>2.8%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>5.0%</td>
<td>-2.1%</td>
<td>24.7%</td>
<td>16.9%</td>
<td>10.9%</td>
<td>12.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.5%</td>
<td>0.1%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>3.4%</td>
<td>2.1%</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>0.7%</td>
<td>-0.3%</td>
<td>3.4%</td>
<td>2.9%</td>
<td>2.5%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>1.8%</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.1%</td>
</tr>
</tbody>
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</body>
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The 0.7% gain in the January consumer price index (CPI-U) was the strongest for any month since last September and lifted the y/y gain to a firm 4.0%. Consensus expectations had been for a 0.5% m/m rise. Energy prices ballooned 5.0% [...]

CPI Lifted By Energy & Food

Sticky services prices behind sticky overall PCE inflation

Flash April PMIs point to slower growth in the US but a pickup in Europe and Japan

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

Inflation surprising to upside in the US; by contrast to the downside in the euro area

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

Fiscal-policy aided factory building in the U.S. provided an unusually large boost to growth last year

US consumers much more optimistic than those in the Euro area and the UK

  Job openings take a step down in 2024

Fed's super core services inflation measure pushing up core rate

Blue Chip forecasters expect significant monetary easing this year except in Japan

Euro area economy stagnating while US grows above trend

Chinese and Japanese equity markets are diverging markedly

Chinese population declines in 2023 for second consecutive year

Outlook for US GDP growth on the rise; declining in euro area, Japan and China

There are still 1.4 job openings for every unemployed person in the US

US PCE inflation over the past six months has slowed to the Fed's 2% target

FOMC think rate hikes are done and looks for 75bps of decline in 2024

Weaker economic data surprises pushing down US interest rates

Recent disinflation has been widespread across Europe and North America

Recent decline in US inflation expectations helping to lower interest rates

China is losing its luster as foreign direct investment heads out

Blue Chip forecasters think Fed will be tighter for longer

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Nonfarm payrolls increased 175,000 (1.8% y/y) in April after rising 315,000 in March, revised from 303,000, and 236,000 in February, revised from 270,000. Expectations had been for a 250,000 rise in the Action Economics Forecast Survey. The three-month average change of 242,000 is the slowest since December of	 last year.

Average hourly earnings increased 0.2% in April after an unrevised 0.3% March gain and a 0.1% uptick in February, revised from 0.2%. The 3.9% y/y earnings increase remains below the 5.9% high in March 2022. It is the weakest rise since June 2021.

The unemployment rate, measured in the household survey, rose to 3.9% and reversed its decline to 3.8% in March. An unchanged 3.8% had been expected. Household employment rose 25,000 after increasing 498,000 in March. The labor force rose 87,000 after a 469,000 March gain. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons edged up to 7.4%. It was the highest rate since November 2021.

In the **payroll survey**, private-sector employment increased 167,000 (1.7% y/y) in April after rising 243,000 in March. Construction sector employment increased 9,000 (3.3% y/y) last month following a 40,000 March gain. Factory sector jobs rose 8,000 (0.1% y/y) after falling 4,000. Mining & logging sector jobs fell 3,000 (+0.3% y/y) during April after rising 3,000 in March.

Private service-producing sector employment improved 153,000 in April (1.7% y/y) after a 204,000 March rise. Increases varied greatly amongst service sector categories. Education & health service jobs rose 95,000 (4.3% y/y) after rising 88,000 in March while leisure & hospitality employment rose 5,000 (2.3% y/y) after a 53,000 gain. Trade, transportation & utilities employment gained 52,000 (0.7% y/y) after rising 31,000 while financial activities jobs rose 6,000 (0.5% y/y) after rising 5,000 in March. Information sector employment fell 8,000 (-1.4% y/y) following a 4,000 gain and professional & business service jobs decreased 4,000 (0.5% y/y) after a 10,000 March rise. Within that category, the number of temporary jobs fell 16,400 (-6.0% y/y) and have fallen consistently since a March 2022 high.

Government sector payrolls improved a negligible 8,000 last month (2.8% y/y) after increasing 72,000 in March. Local government jobs held steady (2.4% y/y) after rising 51,000 in March and state government employment rose 6,000 (3.7% y/y) after an 11,000 gain. The number of federal government jobs increased 2,000 (2.9% y/y) following a 10,000 rise.

The 0.2% rise in private-sector average hourly earnings reflected a 0.2% gain (5.1% y/y) in the goods-producing sector which followed a 0.6% improvement in March. Earnings in construction strengthened 0.6% (5.2% y/y) while factory sector earnings eased 0.1% (+4.8% y/y). In the private services-sector, earnings rose 0.2% last month (3.7% y/y) after a 0.3% gain. Information sector earnings edged 0.1% higher (3.4% y/y) following a 0.4% improvement. Financial sector earnings increased 0.4% (6.0% y/y) for the third straight month. Private education & health services earnings rose slightly (2.8% y/y) after holding steady in March. Trade, transportation and utilities pay rose 0.1% (3.4% y/y) in April after a 0.2% rise.

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The length of the average workweek in the private sector eased to 34.3 hours in April after rising to 34.4 hours in March. The workweek in the goods-producing sector fell to 39.7 hours, down from a five-month high of 39.9 hours in March. The construction sector average workweek fell to 38.7 hours from 39.3. The factory sector workweek held steady at 40.0 hours for the third straight month while the average workweek in the private service sector was 33.3 hours, also for the third consecutive month. The aggregate weekly hours index in the private sector, a key indicator of production and income, eased 0.1% in April (1.7% y/y) after rising 0.4% in both of the prior two months.

In the **household survey**, the jobless rate climbed to 3.9% as the size of the labor force rose more quickly than employment. The labor force participation rate held steady at 62.7%. The rate for teenagers declined to 37.6%, while for individuals aged 20-24 it rose to 72.4%. For rate for workers aged 25-54, it edged higher to 83.5% but for workers 55 and over, it fell slightly to 38.4 hours.

The employment/population ratio for all workers slipped to 60.2% in April, standing slightly below where it was twelve months earlier. It remained below its high of 61.1% in February, 2020 just prior to the pandemic.

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

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- Job increase slows to weakest in just over one year.
- Earnings increase moderates.
- Jobless rate moves up as employment increase is negligible.

U.S. Payroll Employment & Wage Growth Moderate in April; Jobless Rate Edges Up

Andrew Cates

**Consensus interest rate forecasts**
Despite heightened concerns about the potential for lower US interest rates in the coming months, recent forecasts still show a broad consensus that an easing cycle will unfold in the period ahead across most major economies. The latest Blue Chip Financial Forecasts survey, for instance, indicates that policy rate reductions of approximately 100 basis points are anticipated from the Fed over the next 12 months. Additionally, the European Central Bank and the Bank of England are expected to implement cumulative cuts of 166 and 111 basis points, respectively, during the same timeframe. In contrast, Japan is expected to see further rate hikes, specifically an increase of 17 basis points over the year ahead.

240502Z1.jpg

**US data surprises and 2 year bond yields**
The anxiety in financial markets about the Fed’s scope to lower interest rates can be largely traced to the US economy’s resilience – and its tight labour market in particular – together with sticky inflation. The former, however, namely economic resilience, has arguably being challenged in recent days by some, though by no means all, US data releases. These include, for example, a weaker-than expected consumer confidence report and ISM survey of manufacturing. Citigroup’s US growth surprise index has, against that backdrop, turned sharply lower.

240502Z2.jpg

**US and euro area data surprises versus the euro**
A corresponding trend has also unfolded in the FX market. While US data have been a little more disappointing this contrasts with euro area data, which have been more resilient. Yet, thanks to still-firm US/Europe yield differentials, the US dollar has remained fairly resilient versus the euro (see chart 3).

240502Z3.jpg

**Japan’s economy**
This week’s disappointing retail sales data from Japan could call into question the scope for further policy rate hikes from the Bank of Japan (BoJ) in the coming months. Retail sales specifically slowed to 1.2% y/y in March from 4.7% in February. That slowdown, moreover, was broadly-based, with reduced sales activity seen across various product categories.

240502Z4.jpg

**Airport traffic in China**
The latest monthly dataflow from China have been a little more upbeat but that was not the message from this week’s official PMI surveys for April. Other less widely monitored data are also yielding sobering messages about the current economic environment. For instance, while aircraft movements at Beijing Airport have risen from their low points, they still remain well below pre-COVID pandemic levels (see chart 5). Similarly, specific data on cargo volumes and passenger traffic lead to the same conclusion.

240502Z5.jpg

**Global warming and water levels**
Finally, on more structural matters, climate change continues to generate profound shifts in the economic landscape, influencing everything from agricultural productivity to energy markets and global supply chains. One manifestation of these shifts is low water levels in many areas and for example, in the Panama Canal. More specifically Gatun Lake has seen prolonged drought conditions, exacerbated by the El Niño phenomenon and broader climate change anomalies. The drought has resulted in lower-than-average rainfall and delayed rainy seasons, leading to reduced water availability not only for canal operations but also for over half of Panama's population relying on this water source. To that supply chain point above, the canal has also had to reduce the number of ships it can accommodate per day.

240502Z6.jpg

Lingering concerns about the US Fed's inclination to lower interest rates in coming months have continued to unsettle financial markets over the past few days. That said, comments from Fed Chair Powell after this week’s FOMC meeting have calmed some of those nerves. In our charts this week we delve into the latest Blue Chip consensus on policy rates across the world’s major economies (chart 1). We also compare market expectations for US policy rates, inferred from 2-year Treasury yields, with a trend toward more negative US data surprises in recent days (chart 2). In addition we contrast that more negative US growth trend with the relative resilience of the euro area dataflow and some recent downward pressure on the EUR/USD exchange rate (chart 3). Turning to Asia, we assess Japan's economy with a focus on some recent disappointing retail sales data (chart 4), and provide insights into China's economic activity through aircraft movements at Beijing Airport (chart 5). Finally, and with a nod to climate change and its impact, we look at reduced water levels on the Panama Canal and how these contrast with above-average land and sea temperatures over the past few years (chart 6).

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Charts of the Week: Policy Surprises Versus Data Surprises

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The U.S. trade deficit in goods and services (BOP basis) of $69.4 billion in March compared to a $69.5 billion in February, revised from $68.9 billion, and an unrevised $67.6 billion in January, according to the U.S. Census Bureau. The deficit remained nearly the largest since April 2023 which was $72.2 billion. A $69.1 billion deficit had been expected in the Action Economics Forecast Survey. Exports fell 2.0% and were roughly unchanged y/y, reversing a 2.2% February rise. Imports declined 1.6% (+3.1% y/y) in March, following three straight months of moderate gain.

The deficit in goods trade (BOP basis) increased to $92.5 billion in March from $91.7 billion in February. Goods exports fell 2.9% (-2.8% y/y) after rising 2.8% in February. Imports of goods declined 1.6% (+2.5% y/y) following three straight monthly increases. The services trade surplus increased to $23.1 billion in March from $22.2 billion in February but remained down from a peak surplus of $25.2 billion last August. Services exports eased 0.2% (+6.0% y/y) following four consecutive monthly increases. Services imports declined 1.7% (+5.4% y/y) after rising 4.7% in February.

The real (inflation-adjusted) goods trade deficit (customs value; chained 2017 dollars), widened to $88.6 billion in March, the largest deficit since April of last year, from $87.4 billion in February. Real exports of goods declined 3.2% (-0.7% y/y) after rising 2.0% in February. Real imports of goods fell 1.5% (+2.5% y/y) after three straight monthly increases. In the first quarter of this year, a widening of the trade deficit (net exports) subtracted 0.86 percentage points from GDP growth after adding 0.25 percentage points to growth in Q4 2023.

The customs value goods trade deficit widened to $91.5 billion in March from $90.5 billion in February. The latest figure compared to a $91.8 billion deficit in the advance report released on April 25. Customs value exports fell 3.0% (-1.7% y/y) in March after a 2.8% February increase. Automotive vehicles, parts & engines rose 0.6% (-1.7% y/y) while nonfood consumer goods excluding autos declined 1.8% (-5.1% y/y). Capital goods exports excluding autos weakened 3.7% (+3.1% y/y) while exports of industrial supplies & materials fell 3.0% (-4.1% y/y). Foods, feeds & beverages exports were off 8.2% (-1.5% y/y).

Customs value imports of goods declined 1.6% (+2.6% y/y) in March after increasing for three straight months. Automotive vehicles, parts & engines imports fell 11.1% (+6.1% y/y) while capital goods imports excluding autos rose 0.1% (7.4% y/y). Foods, feeds & beverage imports declined 3.5% (+5.2% y/y). Imports of industrial supplies & materials fell 2.9% (-7.0% y/y) but nonfood consumer goods excluding autos rose 4.8% (4.1% y/y). Meanwhile, petroleum imports declined 2.5% and were unchanged y/y in March, following a 1.6% February rise. Nonpetroleum imports weakened 1.5% (+2.8% y/y) following three straight monthly increases.

The rise in services exports reflected a 0.7% increase (12.4% y/y) in personal, cultural & recreational services and a 1.3% decline (+24.9% y/y) in travel services exports. Exports of construction services declined 1.3% (+2.6% y/y) while government goods & services exports declined 0.9% (-23.0% y/y). The increase in services imports was due to construction services imports which rose 1.0% (35.1% y/y) but travel services imports fell 2.6% (+21.7% y/y). Imports of transport services declined 5.8% (-0.1% y/y) while charges for the use of intellectual property eased 0.1% (+3.2 y/y) in March.

The U.S. goods trade deficit with China widened to a seasonally adjusted $24.1 billion in March from $21.9 billion in February. Exports fell 3.6% (-10.3% y/y) while imports rose 4.8% (unchanged y/y). The goods trade deficit with the European Union deepened to $19.5 billion from $17.6 billion in February as exports fell 3.4% (-6.4% y/y), off for the third straight month, and imports rose 1.8% (4.2% y/y). The trade deficit with Japan narrowed to a seasonally adjusted $5.3 billion in March after narrowing to $6.2 billion in the previous month. Exports declined 1.9% (+3.0% y/y) while imports fell 8.7% (-2.2% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver's **USECON** database. Detailed figures on international trade are available in the **USINT** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Exports and imports both fall.
- Adjusted for inflation, goods trade deficit increases to eleven-month high.
- Goods trade deficits with China & Europe deepen.

U.S. Trade Deficit Deepens in March

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The Commerce Department reported that inventories in the factory sector remained unchanged (0.6% y/y) during March after a 0.2% February rise. Transportation equipment inventories held steady (6.9% y/y). Furniture inventories increased 0.3% (-4.4% y/y) while electrical equipment inventories dropped 0.4% (-0.5% y/y). Amongst nondurable goods industries, petroleum inventories were 0.5% higher (2.6% y/y) and plastics & rubber inventories rose 0.2% (-4.8% y/y). These changes were accompanied by a 0.5% rise (-1.7% y/y) in apparel. Basic chemical inventories were unchanged (-0.6% y/y) for a second consecutive month while paper product inventories gained 0.2% (-2.6% y/y).

Orders to all manufacturers improved 1.6% (1.7% y/y) in March following a 1.2% February rise. The gain was led by a 2.6% rise (1.2% y/y) in durable goods orders, as commercial aircraft surged 30.6% (-50.9% y/y) in. New orders excluding transportation gained 0.5% (1.6% y/y). Orders for nondurable goods (which equal shipments) rose 0.6% (2.1% y/y). The rise reflected a 1.5% increase (4.9% y/y) in shipments from oil refineries and a 0.7% gain (2.1% y/y) in basic chemicals. Orders for textile products declined 1.4% (-1.7% y/y) and apparel orders fell 0.2% (-1.9% y/y). Orders for food products rose 0.2% (-0.3% y/y). Paper product shipments held steady (-2.0% y/y).

Unfilled orders improved 0.4% in March (9.1% y/y) and, excluding the transportation sector, they eased 0.1% (-0.9% y/y). Backlogs of electrical equipment slipped 0.1% (+0.7% y/y). Unfilled orders in the machinery sector eased 0.3% (-3.9% y/y) and unfilled orders for transportation equipment rose 0.7% (15.5% y/y). Unfilled orders of furniture rose 0.6% (-5.6% y/) and fabricated metals backlogs were off 0.1%, unchanged y/y.

The factory sector figures are available in Haver's **USECON** database.

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- Inventories levels are flat.
- Order improvement led by aircraft.
- Unfilled orders rise.

U.S. Factory Inventories Hold Steady While Orders Rise in March

Kathleen Stephansen, CBE

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Nonfarm business sector productivity increased 0.3% (SAAR) during Q1’24, following upwardly revised gains of 3.5% in Q4’23 and 4.6% in Q3’23. The rises in productivity were originally reported as being 3.4% in Q4 and 4.4% in Q3. Expectations had been for a 0.8% rise in the Action Economics Forecast Survey. On a year-on-year comparison, Q1 productivity rose 2.9%, up from 2.7% in Q4 and 2.4% in Q3. The y/y gain was the quickest since 2020. Real value-added output rose 1.3% (SAAR) (3.2% y/y) in Q1 from a 3.8% (3.3% y/y) gain in Q4.

Hours-worked in the nonfarm business sector rose 1.0% (0.3% y/y) in Q1 from a 0.2% (0.6% y/y) rise in Q4. Nonfarm hourly compensation increased 5.0% (4.7% y/y) in Q1 from a 3.5% gain (5.2% y/y) in Q4. Adjusted for price inflation, real compensation per hour rose 1.1% (1.5% y/y) in Q1, following a 0.8% (1.9% y/y) rise in Q4.

Weaker productivity brought an acceleration in unit labor costs to 4.7% (1.8% y/y) in Q1 after a 0.0% (2.4%) rise in Q4. The Action Economics Forecast Survey called for a 2.3% quarterly rise in unit labor costs.

In the manufacturing sector, real output per hour slowed to a rise of 0.2% (1.2% y/y) last quarter after a gain of 2.4% (0.9% y/y) in Q4. Manufacturing output was unchanged over the quarter (-0.1% y/y) after declining 1.0% (-0.2% y/y) in Q4. Hours-worked declined 0.2% (-1.3% y/y) in Q1 after a drop of 3.3% (-1.1% y/y) in Q4.

Compensation per hour in manufacturing slowed to a gain of 3.4% (6.3% y/y) last quarter following a rise of 6.8% (6.7% y/y) in Q4. Real compensation declined 0.4% (3.0% y/y) in Q1, after a rise of 4.0% (3.4% y/y) in Q4. Unit labor costs in manufacturing slowed to a rise of 3.2% (5.0% y/y) in Q1 following a gain of 4.2% (5.8% y/y) the prior quarter.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

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- Productivity slows in Q1.
- Unit labor costs rise sharply.
- Slowdown in factory productivity and unit labor cost growth.

Economy in Brief: February 2006

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Mass Layoffs Lowest Since 2000

Help-Wanted Advertising Dipped

Initial Claims for Jobless Insurance Back Down

Initial Claims for Jobless Insurance Back Down

Better Manufacturing Sector Prospects in Europe and the UK

Chain Store Sales Recovered Some

Mortgage Applications Inched Up

CPI Lifted By Energy & Food