Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040420a.jpg" width="353">
Chain store sales jumped 1.0% last week following a 0.8% gain the week earlier, according to the International Council of Shopping Centers (ICSC)-UBS survey.
These two strong increases pulled the level of sales in April about even with March.
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.
During the last ten years there has been a 51% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and consumer sentiment.

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">04/17/04</th>
<th scope="col">04/10/04</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>
<tbody>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>440.3</td>
<td>436.1</td>
<td>5.9%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
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Chain store sales jumped 1.0% last week following a 0.8% gain the week earlier, according to the International Council of Shopping Centers (ICSC)-UBS survey. These two strong increases pulled the level of sales in April about even [...]

Chain Store Sales Jump

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040419b.jpg" width="353">
France&#39;s Current Account has been deteriorating since early 2002. In 2003 it was 53% below the level of 2002. Much of the decline can be attributed to the rise of the euro, which on average rose from .9452 to 1.1317, or about 20%.
The attached chart compares the Euro on an inverted scale with France&#39;s current account balance. The rise in the euro (a decline on the chart) since early 2002 is reflected in the decline of the current account balance.
The euro has recently declined and as of April 19, was 1.2019, or some 6% below the peak reached in January of this year. A lower euro should help to improve France&#39;s current account and the improvement in the current account in February, moving to a positive 1,397 million euros from a negative 409 million euros in January is encouraging. However, the current account for the first two months of the year is still only half that of the first two months of 2002.

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<th scope="col" class="firstcol">France</th>
<th scope="col">Feb 04</th>
<th scope="col">Jan 04</th>
<th scope="col">Feb&nbsp; 03</th>
<th scope="col">M/M Chg</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Current Account&nbsp; (millions of Euros)</td>
<td>1397</td>
<td>-404</td>
<td>727</td>
<td>1806</td>
<td>670</td>
<td>10828</td>
<td>23209</td>
<td>24627</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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<td class="firstcol">US$ vs Euro</td>
<td>1.261</td>
<td>1.2640</td>
<td>1.0785</td>
<td>0.02</td>
<td>17.20</td>
<td>1.1317</td>
<td>.9453</td>
<td>.8955</td>
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France's Current Account has been deteriorating since early 2002. In 2003 it was 53% below the level of 2002. Much of the decline can be attributed to the rise of the euro, which on average rose from .9452 to 1.1317, or about 20%. The [...]

France's Current Account Balance Improves in February, but It Has a Long Way to Go to Reach Previous Highs

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040419a.jpg" width="353">
The Composite Index of Leading Economic Indicators reported by the Conference Board rose an expected 0.3% in March. The gain followed no change in February.
The gain reflected increases in 60% of the component series but shorter delivery lead times, as measured by stronger vendor performance, had the largest positive contribution of 0.26%. Over a six-month span 70% of the leading series rose.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators rose 0.2% and 75% of the component series were higher.
The ratio of coincident-to-lagging indicators rose 0.3% to another record level. The ratio is an indicator of excess relative to actual economic performance.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM"> Business Cycle Indicators</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Leading</td>
<td>0.3%</td>
<td>0.0%</td>
<td>4.4%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>-0.8%</td>
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<td class="firstcol">Coincident</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>0.4%</td>
<td>-0.5%</td>
<td>-0.5%</td>
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<td class="firstcol">Lagging</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-3.1%</td>
<td>-2.2%</td>
<td>-2.8%</td>
<td>-1.4%</td>
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The Composite Index of Leading Economic Indicators reported by the Conference Board rose an expected 0.3% in March. The gain followed no change in February. The gain reflected increases in 60% of the component series but shorter [...]

Leading Indicators Continued Uptrend

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/040416e.jpg" width="353">
 Labor market conditions in the UK have improved markedly in the most recent months. The number of people employed (&quot;labor force employment&quot; in the table below) jumped 120,000 in the December reporting period and another 58,000 in the January period, which was published today. All these data except the Claimant Count are reported as 3-month centered moving averages; that is, the new January data are the average of December, January and February. The series begin in April 1992.
As jobs have increased, unemployment has decreased, with the unemployment rate reaching 4.8% in December and January, an all-time low. Labor force participation has increased, with the so-called &quot;economic activity rate&quot; climbing to an all-time high of 63.2% of the population over age 16. Unemployment is thus down because of the gain in jobs, not, as sometimes happens, because people are backing away from the labor force. Note that claims for the &quot;Jobseeker&#39;s Allowance&quot; have also declined.
At the same time, earnings have increased markedly. The &quot;headline rate&quot; for 12-month gains in average earnings jumped by 1.5 percentage points over the last two months. It is seen that the surge is entirely due to higher bonuses; this is a stark shift from earlier periods in 2001 and 2002, when decreasing bonuses meant workers with bonuses actually saw weaker compensation gains than workers with straight earnings alone.

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<th scope="col" class="firstcol">UK: Selected Labor&nbsp; Market Indicators</th>
<th scope="col">&quot;Feb&quot;&nbsp; (3&nbsp; months ended Mar)</th>
<th scope="col">&quot;Jan&quot;&nbsp; (3&nbsp; months ended Feb)</th>
<th scope="col">&quot;Dec&quot; (3&nbsp; months ended Jan)</th>
<th scope="col">Year Ago (&quot;Jan&quot;)</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Unemployment Rate (%)</td>
<td>N.A.</td>
<td>4.8</td>
<td>4.8</td>
<td>5.1</td>
<td>5.0</td>
<td>5.2</td>
<td>5.1</td>
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<td class="firstcol">Claimant Count (thous.)</td>
<td>882.2*</td>
<td>886.4*</td>
<td>891.7*</td>
<td>942.3*</td>
<td>933.2</td>
<td>946.7</td>
<td>969.9</td>
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<td class="firstcol">Labor Force Employment (thous.)</td>
<td>N.A.</td>
<td>28,330</td>
<td>28,272</td>
<td>28,012</td>
<td>28,111</td>
<td>27,865</td>
<td>27,668</td>
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<td class="firstcol">&nbsp;&nbsp; Change (thous.)</td>
<td>N.A.</td>
<td>58</td>
<td>120</td>
<td>2</td>
<td>246</td>
<td>197</td>
<td>218</td>
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<td class="firstcol">Average Earnings Index: &quot;Headline Rate&quot; Including Bonuses (Yr/Yr %Chg)</td>
<td>N.A.</td>
<td>4.9</td>
<td>4.7</td>
<td>3.6</td>
<td>3.4</td>
<td>3.5</td>
<td>4.6</td>
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<td class="firstcol">Average Earnings Index Excluding Bonuses (Yr/Yr %Chg)</td>
<td>N.A.</td>
<td>3.9*</td>
<td>3.9*</td>
<td>4.0*</td>
<td>3.6</td>
<td>4.0</td>
<td>4.8</td>
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Labor market conditions in the UK have improved markedly in the most recent months. The number of people employed ("labor force employment" in the table below) jumped 120,000 in the December reporting period and another 58,000 in the [...]

UK Employment Up, Unemployment Down in Latest 2 Monthly Reports

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040416a.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index fell in mid-April to 93.2 from 95.8 in March. Consensus expectations had been for a firmer reading of 96.0.
During the last ten years there has been an 76% correlation between the level of consumer sentiment and the y/y change in real PCE. That correlation has risen to 84% during the last five years.
Perceptions of current economic conditions slipped 2.5% to 104.1. The expectations index fell 2.9% to 86.2.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> Mid-April</th>
<th scope="col">Mar</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">Consumer Sentiment</td>
<td>93.2</td>
<td>95.8</td>
<td>8.4%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
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<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>104.1</td>
<td>106.8</td>
<td>8.0%</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>86.2</td>
<td>88.8</td>
<td>8.7%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
</table>
U.S. Industrial Production Fell With Lower Utility Output 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040416b.jpg" width="353">
Industrial production fell 0.2% last month as utility output fell 2.4% for the second consecutive monthly decline. Consensus expectations had been for a 0.4% March increase.
Production in the factory sector was unchanged (3.6% y/y) following the unrevised 1.0% February surge.
Output in selected high-technology industries jumped 1.4% m/m (26.6% y/y), but that was only about half the monthly gains during the prior two months. Output of semiconductors &amp; related equipment rose 2.5% (49.1% y/y) and output of computers &amp; peripheral equipment jumped 2.4% (20.2% y/y). Output of communications equipment fell 1.9% (-3.6% y/y).
Excluding high-tech factory output fell 0.1% (+2.2% y/y) following the 0.9% February spike. Output of motor vehicles &amp; parts fell 2.2% (+6.7% y/y) and reversed the February increase. Machinery output added 0.5% (9.0% y/y) to an upwardly revised 2.9% February. Output of furniture jumped 1.1% (-0.2% y/y) but non-durables output added only 0.1% (0.4% y/y).
Total capacity utilization fell to 76.5%. Growth in capacity remained at a low 1.1% y/y.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM"> Production &amp; Capacity</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Industrial Production</td>
<td>-0.2%</td>
<td>0.8%</td>
<td>3.3%</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>-3.4%</td>
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<tr>
<td class="firstcol">Capacity Utilization</td>
<td>76.5%</td>
<td>76.7%</td>
<td>74.8%(3/03)</td>
<td>74.8%</td>
<td>75.6%</td>
<td>77.4%</td>
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</tbody>
</table>
Housing Starts Strong 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040416c.jpg" width="353">
Housing starts jumped 6.4% last month, recovering from a 2.6% drop in February that was revised shallower. March starts were just 2.3% below the record high level in November 2003. Consensus forecasts had been for 1.91M starts.
Single family starts surged 5.5% following three consecutive months of decline. In March single family starts were 4.4% below the record of November 2003.
Multi-family starts jumped 9.7% to a four year high. The previously reported decline in February was revised to a slight increase.
Starts rose across the country&#39;s regions last month except the Northeast where starts fell 4.9% (12.3% y/y) after the 22.9% spike in February. In the South starts rose 8.5% (+16.1% y/y) and in the West they rose 3.7% (+19.0% y/y). In the Midwest starts rose 10.6% (+13.0% y/y).
Building permits rose a moderate 1.9% m/m (+15.3% y/y) following two months of decline.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM"> Housing Starts (000s, AR)</a></th>
<th scope="col"> Mar</th>
<th scope="col">Feb</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">Total</td>
<td>2,007</td>
<td>1,887</td>
<td>15.2%</td>
<td>1,848</td>
<td>1,711</td>
<td>1,601</td>
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<td class="firstcol">&nbsp; Single-family</td>
<td>1,599</td>
<td>1,515</td>
<td>14.8%</td>
<td>1,501</td>
<td>1,364</td>
<td>1,272</td>
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<td class="firstcol">&nbsp; Multi-family</td>
<td>408</td>
<td>372</td>
<td>16.9%</td>
<td>347</td>
<td>347</td>
<td>330</td>
</tr>
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<td class="firstcol">Building Permits</td>
<td>1,946</td>
<td>1,909</td>
<td>15.3%</td>
<td>1,831</td>
<td>1,750</td>
<td>1,637</td>
</tr>
</tbody>
</table>
Housing Market Index Rebounded 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040416d.jpg" width="353">
The Composite Housing Market Index reported by the National Association of Home Builders (NAHB) surged five points in April to 69 and returned to the high for 2004.
During the last fifteen years there has been a 79% correlation between the y/y change in the NAHB index and the change in single family housing starts.
The sub index which measures expected home sales in six months also returned to the high for 2004.
The index of current market conditions for home sales similarly rebounded to the high for the year.
Traffic of prospective buyers fell modestly in April (+37.1% y/y).
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the National Association of Home Builders using this <a href="http://www.nahb.org">link</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM"> Nat&#39;l Association of Home Builders</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">April &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Composite Housing Market Index</td>
<td>69</td>
<td>64</td>
<td>52</td>
<td>64</td>
<td>61</td>
<td>56</td>
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The University of Michigans consumer sentiment index fell in mid-April to 93.2 from 95.8 in March. Consensus expectations had been for a firmer reading of 96.0. During the last ten years there has been an 76% correlation between the [...]

U.S. Consumer Sentiment Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040415d.jpg" width="353">
Employment in Japan in February showed further signs of recovery, as a jobs index released today by the Ministry of Health, Labor and Welfare ticked up to 98.6 (seasonally adjusted, 2000=100), its highest level since March of last year. Further, it is only 0.1 point below its year-ago value, the best (or least bad) performance since August 1998. Japan has indeed endured more than 5-1/2 years of job shrinkage. And 1997 was the last full calendar year that saw a rise.
Employment patterns remain inconsistent, however. Only the service sector is showing outright increases in employment, while finance and construction are still declining markedly. Manufacturing jobs are still decreasing, too, but at a much slower pace than anytime since early 1998. The year-on-year reduction in February of just 1.4% extends a progressive improvement from a 5.1% plunge in May 2002.
Thus, Japan&#39;s job market continues to struggle, but appears to be working its way back toward growth. Similarly, wage rates are also approaching stability, but they too are uneven from month to month and recently have been particularly erratic.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">NSA, Yr/Yr %Chg, except where noted</th>
<th scope="col">Feb 2004</th>
<th scope="col">Jan 2004</th>
<th scope="col">Feb 2003</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment Index,&nbsp; (SA, 2000=100)</td>
<td>98.6</td>
<td>98.5</td>
<td>98.7</td>
<td>98.4</td>
<td>98.9</td>
<td>99.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr %Chg</td>
<td>-0.1</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>-0.5</td>
<td>-0.7</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-6.4</td>
<td>-7.1</td>
<td>&nbsp;</td>
<td>-1.5</td>
<td>-0.4</td>
<td>+0.6</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>-1.4</td>
<td>-1.4</td>
<td>&nbsp;</td>
<td>-2.2</td>
<td>-4.6</td>
<td>-2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Finance</td>
<td>-3.0</td>
<td>-3.6</td>
<td>&nbsp;</td>
<td>-2.3</td>
<td>-2.4</td>
<td>-4.3</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>+2.0</td>
<td>+2.2</td>
<td>&nbsp;</td>
<td>+1.3</td>
<td>+2.3</td>
<td>+2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Wage Index, (SA, 2000=100)</td>
<td>98.4</td>
<td>96.4</td>
<td>98.9</td>
<td>97.4</td>
<td>98.0</td>
<td>99.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr %Chg</td>
<td>-0.4</td>
<td>-1.4</td>
<td>&nbsp;</td>
<td>-0.6</td>
<td>-1.9</td>
<td>-0.5</td>
</tr>
</tbody>
</table>
</body>
</html>

Employment in Japan in February showed further signs of recovery, as a jobs index released today by the Ministry of Health, Labor and Welfare ticked up to 98.6 (seasonally adjusted, 2000=100), its highest level since March of last [...]

Japanese Job Market Struggles Toward Recovery

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040415c.jpg" width="353">
The Philadelphia Fed&#146;s April index of general business conditions in the manufacturing sector rose 8.3 points to 32.5 and recovered all of last month&#39;s decline. Consensus expectations had been for little change at 25.0.
During the last twenty years there has been a 62% correlation between the level of the Philadelphia Fed Business Conditions Index and quarterly growth in real GDP. The correlation with quarterly growth in factory sector industrial production has been 76%.
A separate survey indicated that the index of expected business conditions in six months fell for the seventh month in eight to 33.6, the lowest level since February 2003.
Amongst the sub indexes, shipments rose sharply to 27.7, adding to the March gain. New orders also improved moderately. The employment index again was roughly stable at 12.2 where it has been for the last three months.
The business conditions index reflects a separate survey question, not the sub indexes.
The prices paid index fell slightly to a still strong 51.9.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0404.html">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/SURVEYS/@S5/@S504/@S504.HTM"> Philadelphia Fed Business Outlook</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">April &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>32.5</td>
<td>24.2</td>
<td>-6.2</td>
<td>10.6</td>
<td>7.7</td>
<td>-17.2</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>51.9</td>
<td>53.4</td>
<td>22.0</td>
<td>16.7</td>
<td>12.2</td>
<td>-0.9</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Jumped 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 15, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040415a.jpg" width="353">
Initial claims for jobless insurance jumped 30,000 last week to 360,000 and reversed all of the 13,000 drop the prior week. The prior week&#39;s decline was revised slightly shallower. Consensus expectations had been for 330,000 initial claims.
The 4-week moving average of initial claims rose to 344,250 (-18.5% y/y).
Continuing claims for unemployment insurance dropped 22,000 in the week ended 4/3 and the prior week&#39;s decline was deepened to 48,000.
The insured rate of unemployment was unchanged at 2.4% for the sixth consecutive week.
From the Federal Reserve Bank of San Francisco is this <a href="http://www.frbsf.org/publications/economics/letter/2004/el2004-10.html">paper</a> titled &quot;Workplace Practices and the New Economy.&quot;

<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"> 04/10/04</th>
<th scope="col">4/03/04</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">Initial Claims</td>
<td>&nbsp;&nbsp; 360</td>
<td>330</td>
<td>-17.2%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>2,980</td>
<td>-16.3%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
Empire State Index Improved 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 15, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040415b.jpg" width="353">
The Empire State Index of General Business Conditions improved in April to 36.05. The 10.72 point m/m rise recouped more than half of the prior month&#39;s decline from the record high.
The new orders index jumped sharply and recovered most of the prior month&#39;s drop. The shipments index surged to a new series&#39; high. The employment index also improved and recovered most of the prior two months&#39; decline.
The prices paid index surged to 56.19, a series&#39; record.
The April index of expectations for business conditions six months ahead fell to the lowest level in a year. Expectations for capital expenditures improved for the third month in a row.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html"> 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/SURVEYS/@S5/@S511/@S511.HTM"> Empire State Manufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">4/03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col"> 2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>36.05</td>
<td>25.33</td>
<td>-17.20</td>
<td>16.30</td>
<td>7.02</td>
<td>-13.57</td>
</tr>
</tbody>
</table>
</body>
</html>

The Philadelphia Feds April index of general business conditions in the manufacturing sector rose 8.3 points to 32.5 and recovered all of last month's decline. Consensus expectations had been for little change at 25.0. During the [...]

Philadelphia Fed Index Recovered

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040414e.jpg" width="353">
In addition to the US, a cluster of countries reported March CPI data today. For most, there was little movement in overall inflation on a year-to-year basis. Rates were steady between February and March, as in Italy, where divergent moves among food (faster) and communications prices (slower) were offsetting. France saw a slight downtick and Sweden, less deflation. (Finland, Hungary and Malaysia also released CPI data today, and while those data are updated in Haver databases, we make no comment on them here.)
A common thread among the European nations is the role of energy prices in recent months. In the US, consumer energy prices surged in January, February and March. As seen in the table below, they added notably to inflation in January, 0.4%, and February, 0.2%. They continued rising in March, but a rapidly rising base for the 12-month rate in early 2003 reduced the year-on-year increase. This impact contrasts with European energy prices. The table shows that for both Germany and France, total CPI inflation is LESS than inflation ex energy, that is, the prices for the same energy products which raised inflation in the US reduced inflation in Europe.
The steeply falling dollar must surely be a major cause of this divergence, since the world prices of crude oil and refined products are quoted in dollars. The chart above illustrates this impact. The right-hand scale shows the strengthening Euro. The left-hand scale shows a ratio of the energy component in the German CPI to that in the US data. As the euro has risen, this ratio has fallen markedly. And in fact, energy prices in Germany have actually been lower than a year ago in the last three months. It&#39;s not just that there&#39;s been less inflation in the energy sector in Germany, but price levels have fallen outright. The same situation exists in France. However, the dollar began to firm in March, so perhaps this seeming anomaly of oil that is simultaneously more expensive and cheaper will dissipate. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">12-mo % Changes</th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">US</td>
<td>1.7</td>
<td>1.7</td>
<td>1.9</td>
<td>1.9</td>
<td>2.4</td>
<td>1.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Ex Energy</td>
<td>1.8</td>
<td>1.5</td>
<td>1.5</td>
<td>1.5</td>
<td>1.9</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Exchange Rate (avg.)</td>
<td>1.2261</td>
<td>1.2640</td>
<td>1.2638</td>
<td>1.1317</td>
<td>0.9453</td>
<td>0.8955</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>1.1</td>
<td>0.9</td>
<td>1.2</td>
<td>1.1</td>
<td>1.2</td>
<td>1.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Ex Energy</td>
<td>1.4</td>
<td>1.2</td>
<td>1.3</td>
<td>0.8</td>
<td>1.1</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>1.7</td>
<td>1.8</td>
<td>2.0</td>
<td>2.2</td>
<td>2.3</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Ex Energy</td>
<td>2.1</td>
<td>2.1</td>
<td>2.2</td>
<td>2.4</td>
<td>2.1</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>2.3</td>
<td>2.3</td>
<td>2.2</td>
<td>2.5</td>
<td>2.8</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Sweden</td>
<td>-0.1</td>
<td>-0.4</td>
<td>0.7</td>
<td>1.3</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Underlying Inflation Rate</td>
<td>0.4</td>
<td>0.1</td>
<td>1.1</td>
<td>1.7</td>
<td>2.2</td>
<td>3.4</td>
</tr>
</tbody>
</table>


</html>

In addition to the US, a cluster of countries reported March CPI data today. For most, there was little movement in overall inflation on a year-to-year basis. Rates were steady between February and March, as in Italy, where divergent [...]

Strong Euro Reduces Energy Impact on European Inflation

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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Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

250501Z4.jpg

**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

250501Z5.jpg

**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

250501Z6.jpg

Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

Charts of the Week: Tariff Truce, Tenuous Trust

250430N1.jpg

250430O1.jpg

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.

Economy in Brief: April 2004

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