Tom Moeller

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&bull; Fall in orders is broad-based and likely reflects severe winter weather.
&bull; Orders of core capital goods reverse January gain.
&bull; Shipments weaken but order backlogs &amp; inventories rise.

Manufacturers' orders for durable goods declined 1.1% (+3.2%
y/y) during February following a 3.5% January gain, revised from 3.4%. A 0.6%
Improvement had been expected in the Action Economics Forecast Survey. The
latest decline followed nine consecutive monthly increases.

Orders for nondefense capital goods excluding aircraft fell
0.8% (+9.1% y/y) following a 0.6% January rise, initially reported as 0.5%. The
decline also followed increases in each of the nine prior months.

In the major categories of the report, primary metals and
fabricated metals orders weakened, posting 0.5% (+6.4% y/y) and 0.9% (+6.5% y/y)
declines, respectively. Machinery orders eased 0.6% (+5.9% y/y) while computer
&amp; electronic product orders weakened 0.5% (+8.9% y/y) for a second
consecutive month. Orders for electrical equipment rose 0.2% (7.3% y/y) but
transportation equipment bookings declined 1.6% (-5.8% y/y), reflecting an 8.7%
drop (-3.0% y/y) in motor vehicle &amp; parts orders.

Shipments of durable goods fell 3.5% (+1.5% y/y) following
sharp increases in the prior two months. Shipments of core capital goods fell
1.0% (+7.7% y/y) in February, also after two months of strong gains. Shipments
of transportation products declined 8.2% (-7.3% y/y) as auto and aircraft
shipments fell sharply. Shipments excluding transportation weakened 1.2% (+6.1%
y/y) after increasing in each month since May.

Unfilled orders for durable goods surged 0.8% (-5.8% y/y) in
February after a 0.2% January increase. Order backlogs, excluding transportation,
rose 0.9% (5.7% y/y), following nine consecutive months of gains.

Inventories of durable goods rose 0.7% (1.1% y/y) in February,
after two consecutive monthly declines. Excluding transportation, inventories
increased 0.7% (-0.0% y/y) and have been rising for six consecutive months.

The durable goods figures are available in Haver's USECON
database. The Action Economics consensus forecast figure is in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Durable Goods NAICS
 Classification</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Dec</th>
 <th>Feb Y/Y %</th>
 <th>2020</th>
 <th>2019</th>
 <th>2018</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >New Orders (SA, % chg)</td>
 <td>-1.1</td>
 <td>3.5</td>
 <td>1.2</td>
 <td>3.2</td>
 <td>-7.1</td>
 <td>-1.5</td>
 <td>7.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Transportation</td>
 <td>-1.6</td>
 <td>7.5</td>
 <td>0.1</td>
 <td>-5.8</td>
 <td>-20.0</td>
 <td>-4.8</td>
 <td>9.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Total Excluding
 Transportation</td>
 <td>-0.9</td>
 <td>1.6</td>
 <td>1.8</td>
 <td>8.2</td>
 <td>-0.3</td>
 <td>0.4</td>
 <td>5.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nondefense Capital
 Goods Excl. Aircraft</td>
 <td>-0.8</td>
 <td>0.6</td>
 <td>1.5</td>
 <td>9.1</td>
 <td>1.6</td>
 <td>1.7</td>
 <td>4.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Shipments</td>
 <td>-3.5</td>
 <td>1.7</td>
 <td>2.1</td>
 <td>1.5</td>
 <td>-5.2</td>
 <td>0.8</td>
 <td>6.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nondefense Capital
 Goods Excl. Aircraft</td>
 <td>-1.0</td>
 <td>1.9</td>
 <td>1.1</td>
 <td>7.7</td>
 <td>0.2</td>
 <td>2.4</td>
 <td>5.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Unfilled Orders</td>
 <td>0.8</td>
 <td>0.2</td>
 <td>-0.2</td>
 <td>-5.8</td>
 <td>-6.4</td>
 <td>-1.8</td>
 <td>3.9</td>
 </tr>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td>0.7</td>
 <td>-0.3</td>
 <td>-0.2</td>
 <td>1.1</td>
 <td>0.6</td>
 <td>4.1</td>
 <td>5.2</td>
 </tr>
 </tbody>
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• Fall in orders is broad-based and likely reflects severe winter weather. • Orders of core capital goods reverse January gain. • Shipments weaken but order backlogs & inventories rise. Manufacturers' orders for durable goods declined [...]

U.S. Durable Goods Orders Decline Unexpectedly in February

Robert Brusca

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The U.K. CBI industrial trends survey shows a sharp improvement in orders in March. The total order reading jumped to -5 from February’s -24 as its sequential averages echoed the ongoing improvement in the sector. With that jump in March, the reading now has a 71st percentile standing in its queue of data from 1991, a relatively firm and solid performance reading. The improvement of overall orders was helped by export orders which also moved sharply higher. Export orders jumped to -20 in Mach from -39 in February to post a 45th percentile standing in its queue of data back to 1991. Total orders have improved to a stronger position than export orders, but both are contributing to an upswing. Export orders are undoubtedly being held back by the new post-Brexit U.K. trade relations with the EU. This is a massive one-month jump. On data stretching back to 1988, this month’s month-to-month jump in expected output over the next three months is the second highest change in this month-to-month reading.

Stocks of finished goods are quite low and in the lower one percentile of their range back to 1991. With the virus impacting supply chains, and with a new Brexit trade relationship with the EU members, inventories are weak.

Looking ahead, expected output volume has surge to 30 in March from -2 in February. The sequential averages (three-month, six-month and 12-month) have been very weak; this month’s jump is a spurt out of the blue. The reading was last this strong in April 2017. The change in expected output as well as the change in orders month-to-month are each the second highest month-to-month changes posted since at least May 2000. The CBI index recorded this month is quite impressive, not so much for the level of the reading it has obtained but for the sharp break with past readings.


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Clouds on the Horizon 
However, there are still clouds on the horizon. The U.K. on its own is making outstanding progress vs. the virus. Deaths and infections are dropping sharply and to much more moderate levels despite the more lethal and contagious strain that is circulating. But the U.K. is under threat from the EU that some of its promised shipments of vaccine out of the EU area may not be forthcoming. The EU was slower to order vaccine and production difficulties have hampered supply. Since the U.K. progress is so advanced, the EU wants to retain vaccines made in the EU for use in the EU. That could put U.K. progress into reverse with all sorts of adverse consequences

Milestone as millstone? 
"Britain has hit a Covid-19 vaccination milestone with more than half of all adults having had at least one injection, health secretary Matt Hancock said on Saturday, making it the world’s first major economy to achieve that level of inoculation" <a href="https://www.dawn.com/news/1613704">(Source)</a>.

WWII: over. Brexit: concluded. Vaccine wars? Off… but then, on again? 
Health experts breathed a sigh of relief after the EU and U.K. avoided a vaccine war earlier this year when the bloc backed down on plans to restrict Covid jab exports. But now hostilities have flared up again in the wake of a fresh threat to block doses bound for Britain while Brussels struggles to meet the EU’s shortfall <a href="https://www.theweek.co.uk/952320/will-uk-eu-vaccine-war-delay-lockdown-roadmap">(Source)</a>.

The reinfections in Europe are still an issue and Germany is going to keep a tight lockdown in place even through Easter. The EU has fallen behind other developed countries in obtaining and administering vaccinations.

Rule of law or the rules of the most desperate… laws-be damned? 
"…an EU official told Reuters that while "the Brits are insisting that the Halix plant in the Netherlands must deliver the drug substance produced there to them", the stockpile "produced in Halix has to go to the EU". The Leiden-based plant is listed as a supplier of vaccines "in both the contracts that AstraZeneca has signed with Britain and with the European Union", the news agency reports. Despite being named one of the EU’s main sources of production in a deal signed last August, the factory does not have regulatory approval to supply the bloc, the Financial Times (FT) reports" <a href="https://www.theweek.co.uk/952320/will-uk-eu-vaccine-war-delay-lockdown-roadmap">(Source)</a>.

Since growth depends on vaccination, this dispute is very important. The EU’s desire to trump what appears to be a superior U.K. claims rests on its observation that the U.K. is doing better than the EU and should therefore stand back and let the EU move up in the queue to obtain vaccines. But the U.K. is fighting a nasty strain of the virus and does not want it to reinvigorate. Plus it seems to have had the better foresight and preparedness in signing contracts.

This is not real warfare and I really do not know what consequences a heavy hand by the EU might mean. It does have leverage to do what it wants since that one plant in question is located in the Netherlands. But documentation (as reported above) seems to validate the U.K. prior claim. In the wake of the U.K.-EU dispute over Brexit, this is just more bad blood. The EU was careful to employ the ‘rule of law’ at every turn in the Brexit negotiations with the U.K., but now that law does not favor the EU position the EU viewpoint has changed. This cannot be good for any European relations. I will let the discussion rest here. It is now a political and legal situation, but it does have real economic consequences as does anything that significantly impacts the virus and vaccination progress. For now U.K. industrial trends are very encouraging.


Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
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The U.K. CBI industrial trends survey shows a sharp improvement in orders in March. The total order reading jumped to -5 from February’s -24 as its sequential averages echoed the ongoing improvement in the sector. With that jump in [...]

U.K. CBI Survey Shows Improving Industrial Sector...Will Virus Politics Interfere?

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&bull; Sales decline across the country.
&bull; Median house prices ease.

Harsh winter weather throughout the country kept many
potential home buyers indoors last month. Sales of new single-family homes
declined 18.2% (+8.2% y/y) during February to 775,000 units from 948,000 in
January, revised from 923,000. Earlier figures also were revised. The Action
Economics Forecast Survey expected 879,000 sales in February.

Sales fell throughout the country. Midwest sales dropped 37.5%
(+4.9% y/y) to 85,000, the lowest level since last June. In the West, sales
weakened 16.4% (-8.1% y/y) to 194,000, down from last October's high of 277.000.
Sales in South were off 14.7% (+20.2% y/y) to 458,000. Falling by 11.6% both m/m
and y/y were sales in the Northeast to 38,000, well below a June 2020 high of
52,000.

The median price of a new home fell 1.1% (+5.3% y/y) in
February to $349,400. Working 1.4% higher (7.7% y/y) to $416,000 was the average
price of a new home. These prices are not seasonally adjusted.

The supply of new homes for sale in February rose to 4.8
months, up from 3.5 months in October. The median number of months a new home
stayed on the market after completion declined to 3.2, after surging to 4.5
months in both August and September of last year.

New home sales activity and prices are available in Haver's USECON
database. The consensus expectation figure from Action Economics is available in
the AS1REPNA database.

The Economic Outlook and Prospects for Small Business from Fed Governor Michelle W. Bowman is available
<a href="https://www.federalreserve.gov/newsevents/speech/bowman20210322a.htm">here</a>.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >U.S. New Single-Family
 Home Sales (SAAR, 000s)</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Dec</th>
 <th>Feb Y/Y %</th>
 <th>2020</th>
 <th>2019</th>
 <th>2018</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td>775</td>
 <td>948</td>
 <td>919</td>
 <td>8.2</td>
<td >820</td>
<td >683</td>
<td >617</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Northeast</td>
 <td>38</td>
 <td>43</td>
 <td>39</td>
 <td>-11.6</td>
<td >37</td>
<td >30</td>
<td >32</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Midwest</td>
 <td>85</td>
 <td>136</td>
 <td>121</td>
 <td>4.9</td>
<td >93</td>
<td >72</td>
<td >76</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; South</td>
 <td>458</td>
 <td>537</td>
 <td>534</td>
 <td>20.2</td>
<td >473</td>
<td >399</td>
<td >348</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West</td>
 <td>194</td>
 <td>232</td>
 <td>225</td>
 <td>-8.1</td>
<td >216</td>
<td >182</td>
<td >160</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Median Price (NSA, $)</td>
 <td>349,400</td>
 <td>353,200</td>
 <td>346,600</td>
 <td>5.3</td>
<td >336,000</td>
<td >321,500</td>
<td >326,400</td>
 </tr>
 </tbody>
 </table>
 
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• Sales decline across the country. • Median house prices ease. Harsh winter weather throughout the country kept many potential home buyers indoors last month. Sales of new single-family homes declined 18.2% (+8.2% y/y) during [...]

U.S. New Home Sales Fall Sharply in February

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&bull; Goods trade deficit sets record in 2020.
&bull; Services trade surplus declines to eight-year low.

The U.S. current account deficit deepened to $188.5 billion
during Q4'20 following a widening to $180.9 billion in Q3'20, revised from $178.5
billion. The Action Economics Forecast Survey anticipated a $188.0 billion
deficit. As a percent of GDP, the deficit grew slightly to 3.5%, it's deepest
since Q4'08. During all of 2020, the current account deficit deepened to $647.2
billion from $480.2 billion.

The deficit in goods trade deteriorated to $253.0 billion as
exports grew 8.7% (-5.8% y/y) in Q4. All export categories increased. Capital
goods exports rose 5.7% (-12.9% y/y) and auto exports increased 4.8% (-3.9% y/y).
Exports of nonauto consumer goods increased 8.9% (-1.7% y/y) while foods, feeds
&amp; beverage exports grew 15.1% (24.6% y/y). Imports of goods rose 6.0% (4.3%
y/y) in Q4. The gain reflected a 12.8% increase (7.8% y/y) in auto imports and a
5.6% rise (4.0% y/y) in capital goods imports. Nonauto consumer goods import
improved 6.1% (13.7% y/y) but foods, feeds &amp; beverage imports eased 0.2% (+6.9% y/y).

The surplus on services trade narrowed to $53.0 billion in Q4.
Services exports rose 2.3% (-24.0% y/y) as travel exports strengthened 18.2% (-73.5%
y/y). Export charges for the use of intellectual property improved 4.2% (0.1%
y/y). Imports of services strengthened 6.3% (-22.4% y/y), reflecting a 70.5%
rise (-79.6% y/y) in travel imports in Q4. Imports of charges for the use of
intellectual property increased 0.6% (-3.1% y/y).

The surplus on primary income rose to $47.9 billion after
increasing sharply in Q3. Investment income receipts rose 3.0% (-12.2% y/y)
while investment income payments increased 3.7% (-9.1% y/y). The deficit on
secondary income narrowed slightly to $36.4 billion after deteriorating to a
record $37.7 billion in Q3.

Balance of Payments data are in Haver's USINT
database, with summaries available in USECON. The expectations figure is
in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >U.S. Balance of Payments
 SA</th>
 <th scope="col" >Q4'20</th>
 <th scope="col" >Q3'20</th>
 <th scope="col" >Q2'20</th>
 <th scope="col" >2020</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Current Account Balance ($ Billion)</td>
 <td>-188.5</td>
 <td>-180.9</td>
 <td>-163.2</td>
 <td>-647.2</td>
 <td>-480.2</td>
 <td>-449.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;As % of GDP</td>
 <td>-3.5</td>
 <td>-3.4</td>
 <td>-3.4</td>
 <td>-3.1</td>
 <td>-2.2</td>
 <td>-2.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Balance on Goods ($ Billion)</td>
 <td>-253.0</td>
 <td>-247.5</td>
 <td>-221.5</td>
 <td>-915.6</td>
 <td>-864.3</td>
 <td>-880.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Exports (% Chg)</td>
 <td>8.7</td>
 <td>23.8</td>
 <td>-28.5</td>
 <td>-13.2</td>
 <td>-1.5</td>
 <td>7.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Imports (% Chg)</td>
 <td>6.0</td>
 <td>18.5</td>
 <td>-14.6</td>
 <td>-6.6</td>
 <td>-1.6</td>
 <td>8.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Balance on Services ($ Billion)</td>
 <td>53.0</td>
 <td>56.1</td>
 <td>60.8</td>
 <td>233.9</td>
 <td>287.5</td>
 <td>300.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Exports (% Chg)</td>
 <td>2.3</td>
 <td>1.6</td>
 <td>-18.3</td>
 <td>-21.0</td>
 <td>1.6</td>
 <td>3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Imports (% Chg)</td>
 <td>6.3</td>
 <td>7.2</td>
 <td>-24.6</td>
 <td>-22.1</td>
 <td>4.7</td>
 <td>3.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Balance on Primary Income ($
 Billion)</td>
 <td>47.9</td>
 <td>48.2</td>
 <td>33.3</td>
 <td>181.6</td>
 <td>236.3</td>
 <td>251.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Balance on Secondary Income ($
 Billion)</td>
 <td>-36.4</td>
 <td>-37.7</td>
 <td>-35.9</td>
 <td>-147.1</td>
 <td>-139.7</td>
 <td>-120.9</td>
 </tr>
	 </tbody>
	 </table>
	 
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• Goods trade deficit sets record in 2020. • Services trade surplus declines to eight-year low. The U.S. current account deficit deepened to $188.5 billion during Q4'20 following a widening to $180.9 billion in Q3'20, revised from [...]

U.S. Current Account Deficit Widens in Q4'20

Sandy Batten

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&bull; Gasoline prices continued their rise, posting highest price since April 2019.
&bull; Crude oil prices edged down for second week in past three.
&bull; Natural gas prices fell for fourth consecutive week.

The price of regular gasoline increased 0.4% w/w to $2.87 per gallon (35.1% y/y) in the week ended March 22, its highest level since April 2019, from $2.85 per gallon in the previous week. The price has increased from a low of $2.11 per gallon in November of last year. This was the seventeenth consecutive weekly rise. Haver Analytics adjusts the gasoline price series for normal seasonal variation. The seasonally adjusted price slipped to $2.90 per gallon last week from $2.94 per gallon in the previous week.

The price of West Texas Intermediate crude oil fell last week to an average of $63.24 per barrel in the week ended March 19 from an average of $65.02 per barrel in the previous week. WTI prices have soared 161% from a year ago. The price was $61.55 per barrel yesterday. The average price of Brent crude oil declined to $66.40 per barrel (+136.4% y/y) last week from $68.43 per barrel in the previous week. The price was $64.34 per barrel yesterday.

The price of natural gas fell for the fourth consecutive week to $2.53/mmbtu (+41.3% y/y) in the week ended March 19 from $2.65/mmbtu in the previous week. Yesterday, the price rose to $2.55/mmbtu.

In the four weeks ended March 12, gasoline demand fell 13.0% y/y and demand for all petroleum products declined 11.1% y/y. Crude oil input to refineries fell 24.3% y/y. Gasoline inventories fell 3.6% y/y while crude oil inventories rose 1.7% y/y. The supply of gasoline in inventory in the week ended March 12 was 28.5 days, the lowest since the end of November.


These data are reported by the U.S. Department of Energy. The
price data can be found in Haver's WEEKLY and DAILY databases.
Greater detail on prices, as well as the demand, production and inventory data
are in USENERGY.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th>03/22/21</th>
 <th>03/15/21</th>
 <th>03/08/21</th>
 <th>Y/Y %</th>
 <th>2020</th>
 <th>2019</th>
 <th>2018</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Retail Gasoline ($ per Gallon, Regular,
 Monday)</td>
<td >2.87</td>
<td >2.85</td>
<td >2.77</td>
<td >35.1</td>
<td >2.24</td>
<td >2.57</td>
<td >2.27</td>
 </tr>
 <tr>
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl,
 Previous Week's Average)</td>
<td >63.24</td>
<td >65.02</td>
<td >62.29</td>
<td >161.3</td>
<td >39.43</td>
<td >56.91</td>
<td >64.95</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, Previous
 Week's Average)</td>
<td >2.53</td>
<td >2.65</td>
<td >2.79</td>
<td >41.3</td>
<td >2.03</td>
<td >2.57</td>
<td >3.18</td>
 </tr>
 </tbody>
 </table>
 
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• Gasoline prices continued their rise, posting highest price since April 2019. • Crude oil prices edged down for second week in past three. • Natural gas prices fell for fourth consecutive week. The price of regular gasoline [...]

U.S. Energy Gasoline Prices Rose Further; Oil and Nat Gas Edged Down

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<title>Chicago Fed National Activity Index Increases During January by Tom
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• Goods trade deficit sets record in 2020.
• Services trade surplus declines to eight-year low.
The U.S. current account deficit deepened to $188.5 billion
during Q4'20 following a widening to $181.0 billion in Q3'20, revised from $178.5
billion. The Action Economics Forecast Survey anticipated a $188.0 billion
deficit. As a percent of GDP, the deficit grew slightly to 3.5%, it's deepest
since Q4'08. During all of 2020, the current account deficit deepened to $647.2
billion from $480.2 billion.
The deficit in goods trade deteriorated to $253.0 billion as
exports grew 8.7% (-5.8% y/y) in Q4. All export categories increased. Capital
goods exports rose 5.7% (-12.9% y/y) and auto exports increased 4.8% (-3.9% y/y).
Exports of nonauto consumer goods increased 8.9% (-1.7% y/y) while foods, feeds
&amp; beverage exports grew 15.1% (24.6% y/y). Imports of goods rose 6.0% (4.3%
y/y) in Q4. The gain reflected a 12.8% increase (7.8% y/y) in auto imports and a
5.6% rise (4.0% y/y) in capital goods imports. Nonauto consumer goods import
improved 6.1% (13.7% y/y) but foods, feeds &amp; beverage imports eased 0.2% (+6.9%
y/y).
The surplus on services trade narrowed to $53.0 billion in Q4.
Services exports rose 2.3% (-24.0% y/y) as travel exports strengthened 18.2% (-73.5%
y/y). Export charges for the use of intellectual property improved 4.2% (0.1%
y/y). Imports of services strengthened 6.3% (-22.4% y/y), reflecting a 70.5%
rise (-79.6% y/y) in travel imports in Q4. Imports of charges for the use of
intellectual property increased 0.6% (-3.1% y/y).
The surplus on primary income rose to $47.9 billion after
increasing sharply in Q3. Investment income receipts rose 3.0% (-12.2% y/y)
while investment income payments increased 3.7% (-9.1% y/y). The deficit on
secondary income narrowed slightly to $36.4 billion after deteriorating to a
record $37.7 billion in Q3.
Balance of Payments data are in Haver's USINT
database, with summaries available in USECON. The expectations figure is
in the AS1REPNA database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="897">U.S. Balance of Payments
 SA</th>
 <th scope="col" width="161">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Q4'20</th>
 <th scope="col" width="161">Q3'20</th>
 <th scope="col" width="162">Q2'20</th>
 <th scope="col" width="162">2020</th>
 <th scope="col" width="162">2019</th>
 <th scope="col" width="162">2018</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="897">Current Account Balance ($ Billion)</td>
 <td width="161" align="center">-188.5</td>
 <td width="161" align="center">-181.0</td>
 <td width="162" align="center">-163.2</td>
 <td width="162" align="center">-647.2</td>
 <td width="162" align="center">-480.2</td>
 <td width="162" align="center">-449.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="897">&nbsp;&nbsp;Deficit % of GDP</td>
 <td width="161" align="center">3.5</td>
 <td width="161" align="center">3.4</td>
 <td width="162" align="center">3.4</td>
 <td width="162" align="center">3.1</td>
 <td width="162" align="center">2.2</td>
 <td width="162" align="center">2.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="897">&nbsp;Balance on Goods ($ Billion)</td>
 <td width="161" align="center">-253.0</td>
 <td width="161" align="center">-247.5</td>
 <td width="162" align="center">-221.5</td>
 <td width="162" align="center">-915.6</td>
 <td width="162" align="center">-864.3</td>
 <td width="162" align="center">-880.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="897">&nbsp;&nbsp;Exports (% Chg)</td>
 <td width="161" align="center">8.7</td>
 <td width="161" align="center">23.8</td>
 <td width="162" align="center">-28.5</td>
 <td width="162" align="center">-13.2</td>
 <td width="162" align="center">-1.5</td>
 <td width="162" align="center">7.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="897">&nbsp;&nbsp;Imports (% Chg)</td>
 <td width="161" align="center">6.0</td>
 <td width="161" align="center">18.5</td>
 <td width="162" align="center">-14.6</td>
 <td width="162" align="center">-6.6</td>
 <td width="162" align="center">-1.6</td>
 <td width="162" align="center">8.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="897">&nbsp;Balance on Services ($ Billion)</td>
 <td width="161" align="center">53.0</td>
 <td width="161" align="center">56.1</td>
 <td width="162" align="center">60.8</td>
 <td width="162" align="center">233.9</td>
 <td width="162" align="center">287.5</td>
 <td width="162" align="center">300.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="897">&nbsp;&nbsp;Exports (% Chg)</td>
 <td width="161" align="center">2.3</td>
 <td width="161" align="center">1.6</td>
 <td width="162" align="center">-18.3</td>
 <td width="162" align="center">-21.0</td>
 <td width="162" align="center">1.6</td>
 <td width="162" align="center">3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="897">&nbsp;&nbsp;Imports (% Chg)</td>
 <td width="161" align="center">6.3</td>
 <td width="161" align="center">7.2</td>
 <td width="162" align="center">-24.6</td>
 <td width="162" align="center">-22.1</td>
 <td width="162" align="center">4.7</td>
 <td width="162" align="center">3.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="897">&nbsp;Balance on Primary Income ($
 Billion)</td>
 <td width="161" align="center">47.9</td>
 <td width="161" align="center">48.2</td>
 <td width="162" align="center">33.3</td>
 <td width="162" align="center">181.6</td>
 <td width="162" align="center">236.3</td>
 <td width="162" align="center">251.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="897">&nbsp;Balance on Secondary Income ($
 Billion)</td>
 <td width="161" align="center">-36.4</td>
 <td width="161" align="center">-37.7</td>
 <td width="162" align="center">-35.9</td>
 <td width="162" align="center">-147.1</td>
 <td width="162" align="center">-139.7</td>
 <td width="162" align="center">-120.9</td>
 </tr>
 </tbody>
</table>
&nbsp;
&nbsp;
U.S. New Home Sales Fall Sharply in February 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;February 23, 2021&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 
• Sales decline across the country.
• Median house prices ease.
Harsh winter weather throughout the country kept many
potential home buyers indoors last month. Sales of new single-family homes
declined 18.2% (+8.2% y/y) during February to 775,000 units from 948,000 in
January, revised from 923,000. Earlier figures also were revised. The Action
Economics Forecast Survey expected 879,000 sales in February.
Sales fell throughout the country. Midwest sales dropped 37.5%
(+4.9% y/y) to 85,000, the lowest level since last June. In the West, sales
weakened 16.4% (-8.1% y/y) to 194,000, down from last October's high of 277.000.
Sales in South were off 14.7% (+20.2% y/y) to 458,000. Falling by 11.6% both m/m
and y/y were sales in the Northeast to 38,000, well below a June 2020 high of
52,000.
The median price of a new home fell 1.1% (+5.3% y/y) in
February to $349,400. Working 1.4% higher (7.7% y/y) to $416,000 was the average
price of a new home. These prices are not seasonally adjusted.
The supply of new homes for sale in February rose to 4.8
months, up from 3.5 months in October. The median number of months a new home
stayed on the market after completion declined to 3.2, after surging to 4.5
months in both August and September of last year.
New home sales activity and prices are available in Haver's USECON
database. The consensus expectation figure from Action Economics is available in
the AS1REPNA database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="880">U.S. New Single-Family
 Home Sales (SAAR, 000s)</th>
 <th width="141">Feb</th>
 <th width="141">Jan</th>
 <th width="141">Dec</th>
 <th width="141">Feb Y/Y %</th>
 <th width="141">2020</th>
 <th width="141">2019</th>
 <th width="141">2018</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="880">Total</td>
 <td align="center" width="141">775</td>
 <td align="center" width="141">948</td>
 <td align="center" width="141">919</td>
 <td align="center" width="141">8.2</td>
 <td align="center" width="141">823</td>
 <td align="center" width="141">685</td>
 <td align="center" width="141">614</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="880">&nbsp; Northeast</td>
 <td align="center" width="141">38</td>
 <td align="center" width="141">43</td>
 <td align="center" width="141">39</td>
 <td align="center" width="141">-11.6</td>
 <td align="center" width="141">37</td>
 <td align="center" width="141">30</td>
 <td align="center" width="141">32</td>
 </tr>
 <tr>
 <td class="firstcol" width="880">&nbsp; Midwest</td>
 <td align="center" width="141">85</td>
 <td align="center" width="141">136</td>
 <td align="center" width="141">121</td>
 <td align="center" width="141">4.9</td>
 <td align="center" width="141">94</td>
 <td align="center" width="141">72</td>
 <td align="center" width="141">75</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="880">&nbsp; South</td>
 <td align="center" width="141">458</td>
 <td align="center" width="141">537</td>
 <td align="center" width="141">534</td>
 <td align="center" width="141">20.2</td>
 <td align="center" width="141">472</td>
 <td align="center" width="141">400</td>
 <td align="center" width="141">347</td>
 </tr>
 <tr>
 <td class="firstcol" width="880">m&nbsp; West</td>
 <td align="center" width="141">194</td>
 <td align="center" width="141">232</td>
 <td align="center" width="141">225</td>
 <td align="center" width="141">-8.1</td>
 <td align="center" width="141">219</td>
 <td align="center" width="141">183</td>
 <td align="center" width="141">160</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="880">Median Price (NSA, $)</td>
 <td align="center" width="141">349,400</td>
 <td align="center" width="141">353,200</td>
 <td align="center" width="141">346,600</td>
 <td align="center" width="141">5.3</td>
 <td align="center" width="141">334,267</td>
 <td align="center" width="141">319,267</td>
 <td align="center" width="141">323,125</td>
 </tr>
 </tbody>
</table>





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• Goods trade deficit sets record in 2020. • Services trade surplus declines to eight-year low. The U.S. current account deficit deepened to $188.5 billion during Q4'20 following a widening to $181.0 billion in Q3'20, revised from [...]

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The National Bank of Belgium consumer survey shows an improvement in confidence in March with its consumer index improving to -4 from -9 in February. The one-month, three-month and 12-month improvements are all about the same in simple difference terms as what improvement there is has all come this month on those various timeline comparisons. Compared to January 2020 before Covid-19 set in, consumer confidence is stronger in March at -4 compared to -6 in early-2020, a net gain of 2 points. The topical -4 reading has a 66.4 percentile standing, placing it at the border line of the top one third of values the index has experienced since 1991. A two-thirds standing in this historic queue of data is fine, a sort of Goldilocks position: not too strong, not to weak, well above its median (median occurs at a raking of 50%) and reasonably elevated above that mark.

The virus stalks Belgium as the EU rollout stumbles 
However, all is not well in Belgium. And of course, that is a reference to the virus. Consumer confidence is making progress, but the virus has kicked up its heels again. Prime Minister Alexander De Croo says Belgium faces a few “crucial weeks” as the number of coronavirus cases has risen. In response, the government is going to pause its program of allowing a relaxation of restrictions. The number of new infections has risen by one third over the last seven days. Hospitalizations are up as well, a bit less sharply. Belgium is finding new infections at schools and in the workplace as the number of elderly getting the disease is dropping because of the vaccination program. As an EU member, Belgium is also caught up the problem the EU is having in securing enough vaccine to procced with its program the way it would like. The EU is being accused of threatening to restrict exports from the region. Meanwhile, the EU claims it is only trying to make sure that it gets delivered the vaccine it contracted for. There is a lot of double speak here and the main tension is the U.K. which is no longer an EU member and continues to have bad blood with the EU over any number of issues. The U.K. has done a better job of securing vaccine for its people. The EU is at least embarrassed that it is less vaccinated than the U.K. It wants to use the proportion vaccinated as metric to hold back vaccine shipments to the U.K. so it can catch up, although the EU tries not to put in in exactly those terms.

The guts of the survey are positive 
The Belgian survey finds all household appraisals of the various categories above their respective median except the backward-looking evaluation of the economic situation in the previous 12 months (of course!) and the expected price trends for the next 12 months (42.9%).

The environment for making major household purchases (89.1%) and to achieve savings (89.9%) over the next 12 months are exceptionally strong. The overall economic situation for the next 12 months has an 80.4 percentile standing. The financial situation for the next 12 months is below those lofty levels of evaluation at a 66.9 percentile standing.

Compared to January 2020, four of five ‘next’ ratings are improved with only the price trend assessed as weaker today than in January 2020. The current situation appraisal is up by 10 points as well and the current period is considered favorable for savings.

All in all, these assessments look good. For the most part the response rankings are solid, the comparisons to a year ago are improved and the outlook is also good. The one fly in the ointment is that among the evaluations for the next 12-months two of five - the economic situation and the environment for making major household purchases have weakened on balance over three months. And then, of course, apart from the survey, there is the recent behavior of the virus. Belgium is in many ways is doing well. But as an EU member, it is getting a slow vaccine rollout and is showing signs of vulnerability as a contrast to clear signs of economic progress. When they conflict, the virus wins.


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The National Bank of Belgium consumer survey shows an improvement in confidence in March with its consumer index improving to -4 from -9 in February. The one-month, three-month and 12-month improvements are all about the same in [...]

Confidence in Belgium Continues to Move Up

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&bull; Existing home sales decline to six-month low.
&bull; Inventory of unsold homes falls sharply.
&bull; Prices continue to strengthen.

The market for previously owned homes weakened last month.
The National Association of Realtors (NAR) reported that sales of existing homes
fell 6.6% (+9.1% y/y) to 6.220 million (SAAR) during February from 6.660 million
in January, revised from 6.690 million. The Action Economics Forecast Survey
expected February sales of 6.50 million. Data are compiled when existing home sales close.

Housing supply continues to decline. The number of homes on
the market held steady (NSA) last month but fell 29.5% y/y, remaining at a
record low of 1.03 million units. (The figures date back to January 1999.) The
months' supply of homes on the market remained near the record low at 2.0
months, below a recent high of 4.6 months in May of last year.

Sales were mixed last month across the country. Sales in the
Midwest fell 14.4% (+2.3% y/y) to 1.310 million, down for the third month in the
last four. In the Northeast, sales were off 11.5 (+13.2% y/y) to 770,000 units,
also down for the third month in the last four. In the South, sales decreased
6.1% (+9.9% y/y) to 2.770 million units after a 3.5% January rise. To the
upside, existing home sales in the West rebounded 4.6% (12.3% y/y) to 1.370
million after falling 4.4% in January.

The median price of an existing home increased 3.1% (15.8%
y/y) to $313,000 and matched the record set in October of last year. The median
home price in the West rose 6.2% (20.6% y/y) to $493,300. In
the Northeast, prices eased 1.5% (+20.5% y/y) to $356,000. The median home price
in the South improved 3.0% (13.6% y/y) to $271,200. In the Midwest, prices edged
1.6% higher (14.2% y/y) to $231,800. The average sales price of all existing
homes rose 1.9% last month (12.6% y/y) to $344,200. The price data are not
seasonally adjusted.

Sales of existing single-family homes weakened 6.6% (+8.0%
y/y) to 5.520 million units after easing 0.2% during January. Sales of condos
and co-ops dropped 6.7% (18.6% y/y) to 700,000 units after January's 2.7% increase.

The data on existing home sales, prices and affordability are
compiled by the National Association of Realtors. The data trace back to
February 1968. Total sales and price data and regional sales can be found in
Haver's USECON database. Regional price and affordability data and
national inventory data are available in the REALTOR database. The
expectations figure is from the Action Economics Forecast Survey, reported in
the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Existing Home Sales (SAAR,
 000s)</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Dec</th>
 <th scope="col" >Feb Y/Y %</th>
 <th scope="col" >2020</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total Sales</td>
 <td>6,220</td>
 <td>6,660</td>
 <td>6,650</td>
 <td>9.1</td>
 <td>5,658</td>
 <td>5,327</td>
 <td>5,334</td>
 </tr>
 <tr class="even">
 <td class="firstcol" >&nbsp;&nbsp; Northeast</td>
 <td>770</td>
 <td>870</td>
 <td>890</td>
 <td>13.2</td>
 <td>705</td>
 <td>684</td>
 <td>686</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Midwest</td>
 <td>1,310</td>
 <td>1,530</td>
 <td>1,540</td>
 <td>2.3</td>
 <td>1,339</td>
 <td>1,246</td>
 <td>1,262</td>
 </tr>
 <tr class="even">
 <td class="firstcol" >&nbsp;&nbsp; South</td>
 <td>2,770</td>
 <td>2,950</td>
 <td>2,850</td>
 <td>9.9</td>
 <td>2,458</td>
 <td>2,282</td>
 <td>2,246</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; West</td>
 <td>1,370</td>
 <td>1,310</td>
 <td>1,370</td>
 <td>12.3</td>
 <td>1,156</td>
 <td>1,115</td>
 <td>1,141</td>
 </tr>
 <tr class="even">
 <td class="firstcol" >&nbsp;Single-Family Sales</td>
 <td>5,520</td>
 <td>5,910</td>
 <td>5,920</td>
 <td>8.0</td>
 <td>5,076</td>
 <td>4,749</td>
 <td>4,736</td>
 </tr>
 <tr>
 <td class="firstcol" >Median Price Total ($, NSA)</td>
 <td>313,000</td>
 <td>303,600</td>
 <td>309,200</td>
 <td>15.8</td>
 <td>295,217</td>
 <td>269,783</td>
 <td>257,267</td>
 </tr>
 </tbody>
 </table>
 
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• Existing home sales decline to six-month low. • Inventory of unsold homes falls sharply. • Prices continue to strengthen. The market for previously owned homes weakened last month. The National Association of Realtors (NAR) reported [...]

U.S. Existing Home Sales Decline Sharply in February with Tight Supply

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

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

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 0.6% (-3.6% y/y) during the four weeks ended May 9, 2025. The improvement followed sharp declines in April.

Miscellaneous group prices increased 2.4% (5.9% y/y) over the last four weeks. Natural rubber price soared 13.9% (11.7% y/y). The price of tallow (used in the soap industry) rose 10.6% (41.3% y/y) in four weeks but the cost of framing lumber declined 5.6%, but rose 7.3% y/y.

Prices in the Metals group edged 0.2% higher (-7.3% y/y) over the most recent four weeks. Variation in pricing was wide. Copper scrap prices rose 7.4% (-3.3% y/y) while lead costs rose 4.0% in four weeks (-11.1% y/y). The cost of aluminum increased 2.3% in four weeks, off 4.4% y/y. Working lower, the cost of steel scrap declined 8.1% (-11.6% y/) in four weeks while tin prices followed with a 4.9% decline (-2.9% y/y). Zinc prices eased 0.7% in four weeks and declined 10.3% y/y.

Crude Oil & Benzene group prices edged 0.1% higher (-19.4% y/y) in four weeks. The cost of West Texas Intermediate crude oil weakened 4.0% to $58.50 per barrel and was 25.6% lower y/y. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 8.5% (-41.8% y/y) in the last four weeks. Excluding crude oil, the industrial commodity price index rose 0.9% (-2.1% y/y) during the last four weeks.

Textile group prices edged 0.9% lower (-0.5% y/y) during the last four weeks. Burlap costs declined 14.3% (+7.4% y/y) but the cost of cotton rose 4.5% (-7.7% y/y) over four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Metals prices are mixed.
- Crude oil prices fall sharply.
- Textile prices ease.

FIBER: Industrial Commodity Price Movement Diverges in Latest Four Weeks

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Wholesale trade inventories increased 0.4% (2.2% y/y) during March after rising 0.5% in February, revised from 0.3% after a 0.8% January rise. The increase compared to expectations for a 0.5% rise in the Informa Global Markets Survey and compared to a 0.6% gain in the advance report issued two weeks ago.

Durable goods inventories rose 0.6% in March (1.5% y/y) after rising 0.5% in February. Machinery inventories, the largest sector, increased 0.6% (1.7% y/y) while inventories of motor vehicles & parts, the second largest grouping, rose 1.2% (0.8% y/y). Furniture inventories strengthened 2.7% (6.8% y/y) while electrical equipment inventories declined 1.0% (-3.1% y/y). Inventories of nondurable goods edged 0.1% higher (3.4% y/y). Drug inventories, which make up one-quarter of nondurable inventories, advanced 1.0% (4.6% y/y). Grocery inventories, the second largest category, rose 0.4% (8.3% y/y). Apparel inventories fell 0.8% (-6.5% y/y) and chemical inventories rose 2.1% both m/m and y/y. Petroleum inventories increased 0.7% (0.3% y/y).

Sales at the wholesale level rose 0.6% (6.1% y/y) in March after rising 2.0% in February and falling 0.9% in January. A 0.9% March rise had been expected in the Action Economics Forecast Survey.

Durable goods sales rose 1.0% (8.5% y/y) in March after strengthening 3.2% in February. Sales of electrical equipment & electronic goods, the largest sector, rose 2.5% (20.9% y/y), after a 2.3% rise. Professional and commercial equipment sales, which includes computers, rose 1.2% (11.9% y/y), while vehicle sales declined 1.0% (1.1% y/y). Sales of machinery improved 0.7% (4.2% y/y). Nondurable product sales rose 0.3% (3.9% y/y) in March after gaining 0.9% in February. Drug store sales, the largest category, increased 2.8% (13.4% y/y), while grocery store sales eased 0.2% (+4.3% y/y). Sales of apparel weakened 0.8% (+3.5% y/y) while paper sales declined 1.7% (0.5% y/y). Petroleum product sales fell 4.6% both m/m and y/y.

The inventory-to-sales (I/S) ratio at the wholesale level remained at 1.30 in March and has been moving lower for the last two years.

The wholesale I/S ratio for durable goods eased to 1.69 in March and also has been trending lower. The machinery ratio fell to 2.92 while motor vehicles rose to 1.78. The I/S ratio for nondurable goods slipped to 0.93 and remained down from 1.02 early in 2023. The drug industry ratio eased to 0.94. Apparel's I/S ratio held at 2.06, but remained below its 2.28 level one year earlier, and has been declining since early 2023. The petroleum industry I/S ratio rose to 0.33.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

**Assessing Maximum Employment** from Federal Reserve Governor Adriana D. Kugler is available [here](https://www.federalreserve.gov/newsevents/speech/kugler20250509a.htm).

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- Inventories trend higher y/y.
- Sales increase broadly.
- Inventory-to-sales ratio steadies.

U.S. Wholesale Inventories & Sales Increase in March

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Nonfarm labor productivity fell 0.8% (SAAR) during Q1’25 after increasing 1.7% in Q4’24, revised from 1.5%. A 0.6% decline had been expected in the Action Economics Forecast Survey. It was the first productivity decline since Q2’22. The y/y increase during Q1 fell to 1.4% from 2.1% in Q4. It was below a 3.3% high in the first quarter of last year. Productivity fell as real value-added output dropped 0.3% last quarter (+2.2% y/y) after increasing 2.5% in Q4, and hours worked lengthened 0.6% (0.8% y/y) following a 0.8% gain.

Compensation per hour increased 4.8% last quarter following a 3.7% Q4 rise. Despite the strength of these last two increases, y/y growth decelerated to 2.7% from a 6.8% high one year earlier. Nevertheless, the productivity decline raised unit labor costs by 5.7% (1.3% y/y) in Q1 versus expectations for a 5.2% increase. It followed a 2.0% gain during Q4 and was the strongest quarterly increase in a year.

Factory sector productivity surged 4.5% (1.5% y/y) during Q1’25 following three consecutive increases of roughly 0.5%. This strength was accompanied by a 6.2% rise (2.2% y/y) in hourly compensation which came after two consecutive increases of approximately 4.1%. The strength in productivity lowered the rise in unit labor costs to 1.6% from 3.8% in Q4. The y/y gain fell to 0.7% from 2.0% in Q4 and stood below the 6.2% y/y increase in Q1’24.

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

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- Productivity declines with lower output.
- Compensation surge exacerbates labor market stress.
- Factory sector productivity surge lessens cost pressure.

U.S. Productivity Declines in Q1’25; Unit Labor Costs Surge

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) rose 0.6% (3.2% y/y) in March to 103.2 after rising 0.9% to 102.6 in February and rising 0.8% in January to 101.7. The level of home affordability has risen 14.8% from its low of 89.9 in October 2023. It remains 42.4% below the high of 179.2 in April 2020.

The rise in affordability in March occurred as the median price of an existing single-family home rose 1.8% (2.9% y/y) to $408,000 which was offset by a decline in mortgage rates to 6.73% from 6.92% in February. The price compared to the record $432,900 in June 2024. The decline in mortgage rates compared to a recent low of 6.26% in September of last year and a 7.70% high during October of 2023. It remained well above a December 2020 low of 2.73%. These changes lowered the principal & interest payment by 0.2% (+1.1% y/y) to $2,113 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a lessened 24.2% of income during March. They remained up from a low of 14.0% of income in April 2020.

The rise in housing costs in March was accompanied by improvement in median family income. It increased 0.4% (4.4% y/y) to a record $104,705 after rising 0.4% in February and 0.7% in January.

Housing affordability improved m/m across the country in March. The index edged 0.1% higher (2.8% y/y) to 134.5 in the Midwest. It remains the most affordable region of the country. In the South, the index 0.9% (5.4% y/y) to 106.6 and the affordability index in the Northeast increased 2.1% (-2.6% y/y) to 95.7. In the West, where homes are the least affordable, the index rose 0.8% (3.3% y/y) to 71.8 in March.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022.

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices rise but mortgage rates decline.
- Median income improves.
- Affordability increases across the country.

U.S. Housing Affordability Improves Slightly in March

Carol Stone, CBE

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Initial claims for unemployment insurance were 228,000 seasonally adjusted in the week ended May 3, down from 241,000 in the previous week, which was unrevised. For the latest week, the Action Economics Forecast Survey had expected a smaller decline to 233,000.

In the week ended April 26, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – was 1.879 million, down from 1.908 million in the April 19 week.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, returned to its longstanding rate of 1.2% in the April 26 week; this rate has held that amount since continuously since the week of January 6, 2024, except for the prior week’s 1.3%.

As we do highlight in every week’s discussion, economic conditions vary widely across individual states and territories. In the week ended April 19, the highest unemployment rates were in New Jersey and Rhode Island (both at 2.48%), California (2.26%), Washington (2.14%) and New York (1.85%). The lowest were in Florida (0.36%), South Dakota (0.37%), Alabama (0.41%), Virginia (0.45%) and Nebraska (0.47%). Rates in other notable states include Illinois (1.78%), Pennsylvania (1.53%) and Texas (1.14%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Continued claims for unemployment insurance decreased 29, 000 in the week ended April 26.
- Insured unemployment rate returns to longstanding 1.2%.
- Across the states, the insured unemployment rate ranges from 0.36% to 2.48%.

Economy in Brief: March 2021

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