Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060425a.jpg" width="353">
Chain store sales slipped just 0.2% last week following two consecutive weeks of strong gain, according to the International Council of Shopping Centers (ICSC)-UBS survey.
Chain store sales in April are 1.4% above the March average which rose 0.7% from February.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The leading indicator of chain store sales was unchanged (-0.4% y/y) after the prior week&#39;s unrevised 0.3% decline. In April, the leading indicator is down 0.4% from the March average which rose 0.3% from February.
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.
Retail gasoline prices surged thirteen cents last week to $2.91 per gallon (30.3% y/y) and lifted the April average to $2.74. Relief from the recent upward pressure may have been in evidence yesterday as spot market gasoline prices fell sharply to $2.18 per gallon from $2.35 on Friday.
The Road to Price Stability from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2006/200605/200605pap.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">04/22/06</th>
<th scope="col">04/15/06</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>474.6</td>
<td>475.6</td>
<td>4.1%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Consumer Confidence Rose To Four Year High 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 25, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060425d.jpg" width="353">
The April Index of Consumer Confidence from the Conference Board added 2.0% to the prior month&#39;s upwardly revised 4.7% increase. The increase to 109.6 compared to Consensus expectations for a decline to 106.2 and the latest was the highest since May 2002. The University of Michigan&#39;s preliminary April Index of Consumer Sentiment rose 0.3% (1.7% y/y).
During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060425c.jpg" width="353">
Consumers&#39; assessment of the present situation increased 2.2% and rose for the sixth consecutive month (19.7% y/y). The percentages of respondents who viewed jobs as plentiful (29.1%) and as hard to get (19.6) were at the respective highest and lowest since mid-2003.
The index of consumers&#39; expectations rose another 1.8% (6.0% y/y) as expectations for employment rose but expectations for business conditions and income sagged. Expectations for stock prices rose .
Price inflation expected in twelve months rose to 5.2% from 4.8% expected in February but down sharply from the 6.8% expected last September.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">April</th>
<th scope="col">Mar</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">Consumer Confidence</td>
<td>109.6</td>
<td>107.5</td>
<td>12.4%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
</table>
U.S. Existing Home Sales Increased Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 25, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060425b.jpg" width="353">
 Total existing home sales rose 0.3% to 6.920M last month following a 5.0% spurt during February that was revised down slightly from the initial figure. The gain reported by the National Association of Realtors contrasted to Consensus expectations for a decline to 6.69M.
Sales of single-family homes rose 0.3% after a 4.5% jump during February that was little revised. The data cover sales closed in the latest and previous months, and contrast to the new home sales data which count sales at the signing of a contract. 
In the Northeast, sales posted a strong gain for the second consecutive month (6.0% y/y) and rose to a record high level. Sales in the Midwest also rose, but moderately (3.6% y/y), while sales out West fell 2.3% and were 16.2% below the peak last June. Sales in the South also fell for second consecutive month (+2.1% y/y).
The median price of an existing single-family home rose a slight 0.2% following four consecutive months of decline. Past price levels were, however, upwardly revised though at $217,300 the median price still was 5.4% below the August peak. Prices are not seasonally adjusted.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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 Home Sales</td>
<td>&nbsp;6,920</td>
<td>6,900</td>
<td>-0.7%</td>
<td>7,064</td>
<td>6,722</td>
<td>6,176</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>6,070</td>
<td>6,050</td>
<td>-0.5%</td>
<td>6,170</td>
<td>5,912</td>
<td>5,443</td>
</tr>
<tr class="odd">
<td class="firstcol">Single Family Median Home Price (000) </td>
<td>$217.3 </td>
<td>$216.8 </td>
<td>7.8% </td>
<td>$206.3</td>
<td>$182.8 </td>
<td>$169.1 </td>
</tr>
</tbody>
</table>
  German and Dutch Business Confidence Continues to Rise: Dutch Consumers Less Negative  
by <a href="/comment/Curley.html">Louise Curley</a> April 25, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060425e.jpg" width="353">
Following on yesterday&#39;s reports on business confidence from France and Belgium, two more reports were released today from Germany and the Netherlands. In Germany, the IFO institute&#39;s index rose to 105.9 in April from 105.4 in March. This was the highest level since April, 1991. In terms of the diffusion index, which shows the percent balance of opinion of the respondents, the excess of optimists over pessimists was 11.0%, up from 10.0% in March. Both measures have been rising for the past four months. The consensus had predicted a slight decline for April. Business confidence has also risen in the Netherlands over the past four months and now the excess of optimists over pessimists is 6.1%, the highest since November 2000. The percent balances for Germany and the Netherlands are shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060425f.jpg" width="353">
In spite of the show of confidence in the current situation, business is beginning to show a little caution regarding the outlook. In Germany the percentage of respondents who expect better conditions six months ahead over those who expect worse condition fell from 13.9% to 13.4%. In the Netherlands the percentage of respondents who expect increased production over the next six months over those who expect lower production fell from 22% to 17% in April. The latter figure is not seasonally adjusted whereas the German figure is.
In addition to the overall measure of the business climate, the IFO also provides measures of the business climate for its component industries--manufacturing, construction, wholesale and retail trade. Also available at a later date are data for the components of the manufacturing industry and a wealth of other detail. Current conditions in manufacturing, construction and wholesale trade all improved in April but the conditions in the retail trade sector deteriorated slightly after a sharp improvement earlier in the year.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060425g.jpg" width="353">
Available since May, 2001, are the results of the IFO&#39;s survey of about 2000 firms in the business-oriented segments of the tertiary sector (excluding distribution, financial services, leasing, insurance and government.) This indicator is not yet seasonally adjusted and has not yet been incorporated into the IFO Business Climate Index for industry and trade. In general those engaged in the service sector have had a more positive appraisal of the business climate than those engaged in industry and trade as can be seen in the second chart which compares the diffusion index for the service sector with that for industry and trade.
After September 11, 2001 consumer confidence in the Netherlands fell much more sharply than business confidence and it has yet to reach a point where the optimists outweigh the pessimists, however, the excess of pessimists is diminishing. The third chart compares consumer and business confidence in the Netherlands.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol">Confidence Measures Percent Balances</th>
<th scope="col">Apr 06</th>
<th scope="col">Mar 06</th>
<th scope="col">Apr 05</th>
<th scope="col">M/M Dif </th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003 &nbsp;</th>
</tr>
</thead>
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<tr class="odd">
<td class="firstcol">Germany: IFO Business Climate Total</td>
<td>11.0</td>
<td>10.0</td>
<td>-14.8</td>
<td>1.0</td>
<td>25.8</td>
<td>-9.8</td>
<td>-9.9</td>
<td>-17.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>20.7</td>
<td>19.2</td>
<td>-4.9</td>
<td>1.5</td>
<td>25.6</td>
<td>1.1</td>
<td>4.4</td>
<td>-7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>-13.9</td>
<td>-17.6</td>
<td>-37.8</td>
<td>3.7</td>
<td>23.9</td>
<td>-37.2</td>
<td>-42.2</td>
<td>-43.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale Trade</td>
<td>10.7</td>
<td>9.6</td>
<td>-17.4</td>
<td>1.1</td>
<td>28.1</td>
<td>-9.9</td>
<td>-16.6</td>
<td>-25.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Trade</td>
<td>-5.3</td>
<td>-1.8</td>
<td>-31.1</td>
<td>-3.5</td>
<td>25.8</td>
<td>-28.0</td>
<td>-30.8</td>
<td>-22.6</td>
</tr>
<tr>
<td class="firstcol">Service (Not Included in Total)</td>
<td>23.5</td>
<td>21.0</td>
<td>5.5</td>
<td>2.5</td>
<td>18.0</td>
<td>8.1</td>
<td>6.5</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations Total</td>
<td>13.4</td>
<td>13.9</td>
<td>-10.2</td>
<td>-0.5</td>
<td>23.6</td>
<td>-5.2</td>
<td>-2.1</td>
<td>-6.6</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">The Netherlands</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>
</tr>
<tr>
<td class="firstcol">Producers&#39; Confidence</td>
<td>6.1</td>
<td>5.8</td>
<td>-0.1</td>
<td>0.2</td>
<td>6.2</td>
<td>0.6</td>
<td>-0.1</td>
<td>-5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected Production</td>
<td>17</td>
<td>22</td>
<td>10</td>
<td>-5</td>
<td>7</td>
<td>6</td>
<td>4</td>
<td>1</td>
</tr>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>-6</td>
<td>-10</td>
<td>-16</td>
<td>4</td>
<td>10</td>
<td>-22</td>
<td>-25</td>
<td>-35</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Climate</td>
<td>6</td>
<td>-1</td>
<td>-10</td>
<td>7</td>
<td>16</td>
<td>-23</td>
<td>-32</td>
<td>-56</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Willingness to buy</td>
<td>-14</td>
<td>-15</td>
<td>-20</td>
<td>1</td>
<td>6</td>
<td>-22</td>
<td>-21</td>
<td>-21</td>
</tr>
</tbody>
</table>


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Chain store sales slipped just 0.2% last week following two consecutive weeks of strong gain, according to the International Council of Shopping Centers (ICSC)-UBS survey. Chain store sales in April are 1.4% above the March average [...]

Chain Store Sales Hold The High Ground, Gas Prices Surge Further

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424d.jpg" width="353">
The results of the April surveys of business conditions in the Euro Zone are beginning to appear. Most of these surveys are expressed in terms of the percent balance between those who see improvement and those who see deterioration.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424e.jpg" width="353">
France and Belgium reported today. Both countries showed improved sentiment, particularly when compared with a year ago, as can be seen in the first chart, which compares the year-to-year changes in the percent balance reporting on the general outlook for manufacturing in both countries.
Improvement in sentiment regarding foreign orders has played a significant part in the overall improvement in sentiment in both countries. The upward trends in the percent balances from big to small negatives in the case of Belgium and from big negatives to positives in the case of France are shown in the second chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424f.jpg" width="353">
The Belgium survey is much broader than the French. The French survey conducted by INSEE (Institute National de Statisque et Etudes Economique) covers only the manufacturing industry, while the Belgium survey conducted by the National Bank of Belgium covers, in addition to manufacturing, other industry, wholesale and retail trade, the construction, ex public works, and service industries. The most marked differences among business opinion in Belgium are seen between those engaged in business services and those engaged in wholesale and retail trade. Since the end of 2003, there have been more optimists than pessimists in the service industries, while the pessimists have prevailed in the wholesale and retail trade. The third chart shows the percent balances for the service industry and for wholesale and retail trade.
The sharp run up in the price of oil of the past week or so is probably not reflected in the April surveys and could have a dampening effect on future business opinions.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J5/@J5.HTM">Business Surveys (Per cent Balance)</a></th>
<th scope="col">Apr 06</th>
<th scope="col">Mar 06</th>
<th scope="col">Apr 05</th>
<th scope="col">M/M dif</th>
<th scope="col">Y/Y dif</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
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<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">France</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">&nbsp; Manufacturing</td>
<td>2</td>
<td>-2</td>
<td>-13</td>
<td>4</td>
<td>18</td>
<td>-12</td>
<td>5</td>
<td>-29</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign Orders</td>
<td>6</td>
<td>4</td>
<td>-20</td>
<td>2</td>
<td>26</td>
<td>-14</td>
<td>-10</td>
<td>-21</td>
</tr>
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<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">Belgium</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>6.0</td>
<td>0.0</td>
<td>-16.0</td>
<td>6.0</td>
<td>22.0</td>
<td>-9.9</td>
<td>-2.7</td>
<td>-15.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale &amp; Retail Trade</td>
<td>-8.2</td>
<td>0.5</td>
<td>-3.8</td>
<td>-8.7</td>
<td>-4.4</td>
<td>-2.1</td>
<td>7.7</td>
<td>-9.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction ex Public Works</td>
<td>7.0</td>
<td>3.9</td>
<td>0.6</td>
<td>3.1</td>
<td>7.6</td>
<td>1.5</td>
<td>5.9</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Business Services</td>
<td>&nbsp;11.5</td>
<td>8.6&nbsp;</td>
<td>7.0</td>
<td>2.9</td>
<td>4.5&nbsp;</td>
<td>5.6&nbsp;</td>
<td>7.6&nbsp;</td>
<td>&nbsp;-2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Foreign Orders</td>
<td>18</td>
<td>6</td>
<td>-20</td>
<td>12</td>
<td>38</td>
<td>-8</td>
<td>5</td>
<td>-9</td>
</tr>
</tbody>
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The results of the April surveys of business conditions in the Euro Zone are beginning to appear. Most of these surveys are expressed in terms of the percent balance between those who see improvement and those who see deterioration. [...]

Manufacturers in Belgium and France Report Improving Current Conditions and Prospects: Wholesale and Retail Trade [...]

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424a.jpg" width="353">
The domestic spot price for a barrel of West Texas Intermediate crude oil settled at $73.83 on Friday, driven by Mid East supply concerns and strong demand. That easily surpassed last August&#39;s high of $70 reached in the wake of Hurricane Katrina.
Just ahead of the peak summer driving season, retail gasoline prices at $2.78 per gallon additionally have been boosted by supply shortages (especially for high test) by the phase-out of MTBE for ethanol.
Adjusted for the inflation in &quot;core&quot; consumer prices, gasoline prices are at the all time high reached in 1981, although prices remain low compared to other liquids such as Evian water ($21.19/gallon) and Gatorade ($10.17/gallon).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424b.jpg" width="353">
Growth in demand for gasoline recently wobbled, but the y/y rise of 0.2% in the four week average added to gains which ranged between 1.0% and 2.6% during the prior five years. Growth in the number of miles driven by U.S. motor cars has ranged near 2% this decade, down somewhat from 2.6% during the 1990s and the average fuel consumed per car rose last year to 557 gallons, up 14% from a low during 1991. The figure is, however, down by one quarter since the early 1970s. This data is available in Haver&#39;s USECON database.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424c.jpg" width="353">
Inflationary concerns fueled Friday&#39;s gold price to $623.50 per ounce, up 20.8% since the end of last year. Since 1980 there has been a 56% correlation between the level of gold prices and the y/y change in consumer prices.
Industrial metal prices also have been strong with the JoC-ECRI Industrial Metals Prices Index up 18.9% this year driven by strength in aluminum prices (up 16.5%), copper scrap (up 16.5%) and zinc (up 65.1%). Additionally, high grade copper prices have risen 34.4% since year end &#39;05. Growth in industrial production is behind the rise and during the last ten years there has been a 49% correlation between the level of industrial metals&#39; prices and the y/y change in OECD Big Seven industrial production.
Gasoline Affordability from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20041101/cover.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">04/18/06</th>
<th scope="col">12/27/05</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">Light Sweet Crude Oil, WTI&nbsp; (per bbl.)</td>
<td>$71.36</td>
<td>$58.16</td>
<td>36.4%</td>
<td>$58.16</td>
<td>$41.78</td>
<td>$32.78</td>
</tr>
<tr>
<td class="firstcol">U.S. Retail Gasoline (per gallon)</td>
<td>$2.78</td>
<td>$2.20</td>
<td>24.4%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
<tr class="odd">
<td class="firstcol">Gold: Handy &amp; Harmon (per Troy Oz., EOP)</td>
<td>$614.75</td>
<td>$507.40</td>
<td>28.3%</td>
<td>$507.40</td>
<td>$443.40</td>
<td>$416.25</td>
</tr>
<tr>
<td class="firstcol">High Grade Copper (Comex, /Lb., EOP)</td>
<td>$3.06</td>
<td>$2.28</td>
<td>105.5%</td>
<td>$2.28</td>
<td>$1.54</td>
<td>$1.04</td>
</tr>
<tr class="odd">
<td class="firstcol">Stainless Steel Scrap (/ton, EOP)</td>
<td>$1,574</td>
<td>$1,268</td>
<td>-8.0%</td>
<td>$1,268</td>
<td>$1,558</td>
<td>$1,265</td>
</tr>
</tbody>
</table>
</body>
</html>

The domestic spot price for a barrel of West Texas Intermediate crude oil settled at $73.83 on Friday, driven by Mid East supply concerns and strong demand. That easily surpassed last August's high of $70 reached in the wake of [...]

$73.83: Oil & Water

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424a.jpg" width="353">
The domestic spot price for a barrel of West Texas Intermediate crude oil settled at $73.83 on Friday, driven by Mid East supply concerns and strong demand. That easily surpassed last August&#39;s high of $70 reached in the wake of Hurricane Katrina.
Just ahead of the peak summer driving season, retail gasoline prices at $2.78 per gallon additionally have been boosted by supply shortages (especially for high test) by the phase-out of MTBE for ethanol.
Adjusted for the inflation in &quot;core&quot; consumer prices, gasoline prices are at the all time high reached in 1981, although prices remain low compared to other liquids such as Evian water ($21.19/gallon) and Gatorade ($10.17/gallon).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424b.jpg" width="353">
Growth in demand for gasoline recently wobbled, but the y/y rise of 0.2% in the four week average added to gains which ranged between 1.0% and 2.6% during the prior five years. Growth in the number of miles driven by U.S. motor cars has ranged near 2% this decade, down somewhat from 2.6% during the 1990s and the average fuel consumed per car rose last year to 557 gallons, up 14% from a low during 1991. The figure is, however, down by one quarter since the early 1970s. This data is available in Haver&#39;s USECON database.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424c.jpg" width="353">
Inflationary concerns fueled Friday&#39;s gold price to $623.50 per ounce, up 20.8% since the end of last year. Since 1980 there has been a 56% correlation between the level of gold prices and the y/y change in consumer prices.
Industrial metal prices also have been strong with the JoC-ECRI Industrial Metals Prices Index up 18.9% this year driven by strength in aluminum prices (up 16.5%), copper scrap (up 16.5%) and zinc (up 65.1%). Additionally, high grade copper prices have risen 34.4% since year end &#39;05. Growth in industrial production is behind the rise and during the last ten years there has been a 49% correlation between the level of industrial metals&#39; prices and the y/y change in OECD Big Seven industrial production.
Gasoline Affordability from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20041101/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">04/18/06</th>
<th scope="col">12/27/05</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">Light Sweet Crude Oil, WTI&nbsp; (per bbl.)</td>
<td>$71.36</td>
<td>$58.16</td>
<td>36.4%</td>
<td>$58.16</td>
<td>$41.78</td>
<td>$32.78</td>
</tr>
<tr>
<td class="firstcol">U.S. Retail Gasoline (per gallon)</td>
<td>$2.78</td>
<td>$2.20</td>
<td>24.4%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
<tr class="odd">
<td class="firstcol">Gold: Handy &amp; Harmon (per Troy Oz., EOP)</td>
<td>$614.75</td>
<td>$507.40</td>
<td>28.3%</td>
<td>$507.40</td>
<td>$443.40</td>
<td>$416.25</td>
</tr>
<tr>
<td class="firstcol">High Grade Copper (Comex, /Lb., EOP)</td>
<td>$3.06</td>
<td>$2.28</td>
<td>105.5%</td>
<td>$2.28</td>
<td>$1.54</td>
<td>$1.04</td>
</tr>
<tr class="odd">
<td class="firstcol">Stainless Steel Scrap (/ton, EOP)</td>
<td>$1,574</td>
<td>$1,268</td>
<td>-8.0%</td>
<td>$1,268</td>
<td>$1,558</td>
<td>$1,265</td>
</tr>
</tbody>
</table>
Manufacturers in Belgium and France Report Improving Current Conditions and Prospects:  Wholesale and Retail Trade Merchants in Belgium Less Optimistic 
by <a href="/comment/Curley.html">Louise Curley</a> April 24, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424d.jpg" width="353">
The results of the April surveys of business conditions in the Euro Zone are beginning to appear. Most of these surveys are expressed in terms of the percent balance between those who see improvement and those who see deterioration.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424e.jpg" width="353">
France and Belgium reported today. Both countries showed improved sentiment, particularly when compared with a year ago, as can be seen in the first chart, which compares the year-to-year changes in the percent balance reporting on the general outlook for manufacturing in both countries.
Improvement in sentiment regarding foreign orders has played a significant part in the overall improvement in sentiment in both countries. The upward trends in the percent balances from big to small negatives in the case of Belgium and from big negatives to positives in the case of France are shown in the second chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060424f.jpg" width="353">
The Belgium survey is much broader than the French. The French survey conducted by INSEE (Institute National de Statisque et Etudes Economique) covers only the manufacturing industry, while the Belgium survey conducted by the National Bank of Belgium covers, in addition to manufacturing, other industry, wholesale and retail trade, the construction, ex public works, and service industries. The most marked differences among business opinion in Belgium are seen between those engaged in business services and those engaged in wholesale and retail trade. Since the end of 2003, there have been more optimists than pessimists in the service industries, while the pessimists have prevailed in the wholesale and retail trade. The third chart shows the percent balances for the service industry and for wholesale and retail trade.
The sharp run up in the price of oil of the past week or so is probably not reflected in the April surveys and could have a dampening effect on future business opinions.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J5/@J5.HTM">Business Surveys (Per cent Balance)</a></th>
<th scope="col">Apr 06</th>
<th scope="col">Mar 06</th>
<th scope="col">Apr 05</th>
<th scope="col">M/M dif</th>
<th scope="col">Y/Y dif</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">France</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>2</td>
<td>-2</td>
<td>-13</td>
<td>4</td>
<td>18</td>
<td>-12</td>
<td>5</td>
<td>-29</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign Orders</td>
<td>6</td>
<td>4</td>
<td>-20</td>
<td>2</td>
<td>26</td>
<td>-14</td>
<td>-10</td>
<td>-21</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Belgium</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>6.0</td>
<td>0.0</td>
<td>-16.0</td>
<td>6.0</td>
<td>22.0</td>
<td>-9.9</td>
<td>-2.7</td>
<td>-15.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale &amp; Retail Trade</td>
<td>-8.2</td>
<td>0.5</td>
<td>-3.8</td>
<td>-8.7</td>
<td>-4.4</td>
<td>-2.1</td>
<td>7.7</td>
<td>-9.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction ex Public Works</td>
<td>7.0</td>
<td>3.9</td>
<td>0.6</td>
<td>3.1</td>
<td>7.6</td>
<td>1.5</td>
<td>5.9</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Business Services</td>
<td>&nbsp;11.5</td>
<td>8.6&nbsp;</td>
<td>7.0</td>
<td>2.9</td>
<td>4.5&nbsp;</td>
<td>5.6&nbsp;</td>
<td>7.6&nbsp;</td>
<td>&nbsp;-2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Foreign Orders</td>
<td>18</td>
<td>6</td>
<td>-20</td>
<td>12</td>
<td>38</td>
<td>-8</td>
<td>5</td>
<td>-9</td>
</tr>
</tbody>
</table>
</body>
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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/060421f.jpg" width="353">
The inflation picture in Asia is harder to interpret than that in Europe because the economies have such different structures and the data collection and definitions are less standardized. Three countries reporting today for March show widely varying patterns of consumer price behavior.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060421g.jpg" width="353">
In China, the overall CPI trend shows quite modest gains over the last couple of months, and inflation has definitely slowed from a couple of years ago. Prices of household goods and services are headed higher, which may reflect heating costs, and clothing price changes are distinctly less negative than before. But tobacco and alcohol products, recreation and culture and shelter are slowing down. These outweigh the firming tendencies, so, at just 0.8% year-to-year in March, total CPI inflation in China is the lowest since mid-2003.
In Hong Kong, consumer prices have turned up after a period of outright deflation from 1999 through mid-2004. This too may be energy related as transportation and housing costs are the main movers. Clothing and alcohol and tobacco, though, are exerting downward pressure and durable goods prices are maintaining a steady downward trend at about a 2.5% annual rate. So, while inflation has returned in Hong Kong, it seems to be sustained at a quite moderate pace.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060421h.jpg" width="353">
India encompasses at least two completely different economies, the urban sector and the rural. Inflation in both is presently about equal, however, with the CPI for rural laborers running at 5.3%, year-on-year, in March and 4.7% in February; this follows 4.9% in 2005 and is considerably higher than the 3% range that prevailed in prior years. The current pace is similar for &quot;urban non-manual employees&quot;, at 4.8% in February, although off somewhat from the 5.7% rate for 2005. While we might be concerned over the seemingly rapid pace of Indian inflation at present, it compares quite favorably with 7%-10% rates during the 1980s and 1990s.
These data are all found in Haver&#39;s EMERGEPR database, which we maintain directly from country sources. Regional data for China are carried in the premium CHINA database which we market from CEIC, prominent economic consultants in Asia.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGEPR/@PQ/@PQ5/@PQ51/@PQ51.HTM">Yr/Yr % Change, NSA</a></th>
<th scope="col">Mar 2006</th>
<th scope="col">Feb 2006</th>
<th scope="col">Jan 2006</th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>0.8</td>
<td>0.9</td>
<td>1.9</td>
<td>1.6</td>
<td>2.4</td>
<td>3.2</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Hong Kong</td>
<td>1.8</td>
<td>1.6</td>
<td>2.6</td>
<td>1.8</td>
<td>0.2</td>
<td>-1.9</td>
<td>-1.6</td>
</tr>
<tr>
<td class="firstcol">India: Rural Laborers</td>
<td>5.3</td>
<td>4.7</td>
<td>4.7</td>
<td>4.9</td>
<td>3.0</td>
<td>3.1</td>
<td>3.2</td>
</tr>
<tr class="odd">
<td class="firstcol">India: Urban Non-Manual Employees </td>
<td>--</td>
<td>4.8</td>
<td>5.0</td>
<td>5.7</td>
<td>3.6</td>
<td>4.0</td>
<td>2.8</td>
</tr>
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The inflation picture in Asia is harder to interpret than that in Europe because the economies have such different structures and the data collection and definitions are less standardized. Three countries reporting today for March [...]

Consumer Prices in Asia

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060421e.jpg" width="353">
The number of mass layoff events last month ticked up 0.8% after sharp declines during the prior two months. During all of 1Q, the number of events fell 9.9% from 4Q 2005.
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 increased a larger 6.4% during March after a 2.9% February rise. Nevertheless, the 1Q level was down 9.7% from 4Q 2005. Layoffs in the transportation equipment sector (+10.4% y/y) have been significant and quite volatile m/m.
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.
Company mass layoffs: The &quot;other&quot; job shock from the Federal Reserve Bank of Minneapolis is available <a href="http://www.minneapolisfed.org/pubs/fedgaz/05-11/layoffs.cfm"> 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">Mass Layoffs</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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>1,082</td>
<td>1,073</td>
<td>-10.1%</td>
<td>15,699</td>
<td>15,926</td>
<td>19,220</td>
</tr>
<tr>
<td class="firstcol">Total (# Persons, SA)</td>
<td>118,555</td>
<td>111,468</td>
<td>-11.5%</td>
<td>1,722,452</td>
<td>1,591,081</td>
<td>1,946,548</td>
</tr>
</tbody>
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</body>
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The number of mass layoff events last month ticked up 0.8% after sharp declines during the prior two months. During all of 1Q, the number of events fell 9.9% from 4Q 2005. During the last ten years there has been a (negative) 87% [...]

Mass Layoffs Remained Low in March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060421a.jpg" width="353">
The Federal Reserve Bank of Chicago indicated that the National Activity Index (CFNAI) recovered during March to 0.37 from 0.19 in February. The three-month moving average of the CFNAI, however, fell slightly to 0.29 from 0.34.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth and during the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.
The latest CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_April2006.pdf">here</a>.
Yield Curve Inversions and Cyclical Peaks from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20060501/cover.pdf"> 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/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>0.37</td>
<td>0.19</td>
<td>-0.21</td>
<td>0.20</td>
<td>0.37</td>
<td>-0.11</td>
</tr>
</tbody>
</table>
</body>
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The Federal Reserve Bank of Chicago indicated that the National Activity Index (CFNAI) recovered during March to 0.37 from 0.19 in February. The three-month moving average of the CFNAI, however, fell slightly to 0.29 from 0.34. A zero [...]

Chicago Fed Nat'l Activity Index Recovered

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060421b.jpg" width="353">
The Philadelphia Fed Index of General Business Conditions in the manufacturing sector during April rose slightly to 13.2 from an unrevised 12.3 last month. The 0.9 point m/m increase fell somewhat short of Consensus expectations for a rise to 14.8.
During the last ten years there has been a 65% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 49% correlation with q/q growth in real GDP.
Declines in the sub indexes again were broad based as new orders reversed all of the jump during March and shipments reversed the gains of the prior two months. Moving in the other direction, the index covering the number of employees surged to the highest level (21.7) since late 2004. During the last ten years there has been a 75% correlation between the employment index and the three month growth in factory payrolls.
The business conditions index reflects a separate survey question, not the sub indexes.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060421c.jpg" width="353">
The prices paid index recovered virtually all of last month&#39;s decline. During the last ten years there has been a 76% correlation between the prices paid index and the three month growth in the intermediate goods PPI. There has been an 85% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months recovered nearly all of last month&#39;s decline and rose to 28.2, near the highs of the last year. Expectations for employment recovered moderately.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0406.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;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>13.2</td>
<td>12.3</td>
<td>24.6</td>
<td>12.4</td>
<td>28.0</td>
<td>10.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>29.0</td>
<td>17.2</td>
<td>47.6</td>
<td>43.5</td>
<td>51.2</td>
<td>16.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The Philadelphia Fed Index of General Business Conditions in the manufacturing sector during April rose slightly to 13.2 from an unrevised 12.3 last month. The 0.9 point m/m increase fell somewhat short of Consensus expectations for a [...]

Philadelphia Fed Business Activity Index Up Slightly

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Michael J. Moran

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

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

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

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

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

Personal Income, Consumption, and Prices in March

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

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

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

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

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

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

U.S. Pending Home Sales Surge in March

Sandy Batten

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

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

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

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

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

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

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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

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

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

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

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

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

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

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

Economy in Brief: April 2006

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