Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221d.jpg" width="353">
The Philadelphia Federal Reserve Bank reported that it&#39;s Index of General Business Conditions in the manufacturing sector fell to -24.0 this month from -20.9 in January. The latest level was the lowest since the recession year 2001.
The index is a diffusion index for each component or series. It reflects the increase in activity reported less the decrease.
During the last ten years there has been a 59% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There has been a 42% correlation with q/q growth in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221e.jpg" width="353">
The decline in the overall index represented broad based declines in each of the sub indexes except new orders and the number of employees which ticked up. 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.
The prices paid index also fell slightly after strong up moves during the prior five months. 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 fell sharply to the lowest reading since 1990. Expectations for new orders, shipments and for the number of employees fell sharply.
Are Shocks to the Terms of Trade, Shocks to Productivity? from the Federal Reserve Bank of Minneapolis can be found <a href="http://www.minneapolisfed.org/research/SR/SR391.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">&nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Feb. &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-24.0</td>
<td>-20.9</td>
<td>0.3</td>
<td>5.1</td>
<td>8.1</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>46.6</td>
<td>&nbsp;49.8</td>
<td>&nbsp;18.8</td>
<td>26.4</td>
<td>36.6</td>
<td>40.1</td>
</tr>
</tbody>
</table>
</body>
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The Philadelphia Federal Reserve Bank reported that it's Index of General Business Conditions in the manufacturing sector fell to -24.0 this month from -20.9 in January. The latest level was the lowest since the recession year 2001. [...]

Philadelphia Fed Index Lowest Since 2001

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221f.jpg" width="353">
For January, the Conference Board reported that the composite index of leading economic indicators fell 0.1% after a revised 0.1% decline during December. The latest drop matched Consensus expectations. It was the fifth decline in the last six months and since the series&#39; peak last July it has fallen 2.0%.
For all of last year the leaders fell 0.4% and the six month growth rate, calculated as the latest month&#39;s reading divided by the average of the prior twelve months, was -4.0%, the lowest since early 2001.
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221g.jpg" width="353">
The breadth of one month gain amongst the 10 components of the leading index rose slightly to a break even 50.0%. Over a six month period, the breadth of gain amongst the leaders components cratered to 20%, equal to its lowest level since 2002.
Last month lower stock prices made the largest contribution to the decline in the overall leading index.
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate has been revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.1% after a 0.1% December uptick. Over the last ten years there has been an 86% correlation between the y/y change in the coincident indicators and real GDP growth. Three of the four coincident series components rose very slightly and employment fell.
The lagging index was unchanged and the ratio of coincident to lagging indicators (a measure of economic excess) ticked up slightly but remained near its lowest since 1991. 
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<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/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-1.5%</td>
<td>-0.4%</td>
<td>1.2%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.0%</td>
<td>0.2%</td>
<td>2.3%</td>
<td>3.1%</td>
<td>3.0%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>


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For January, the Conference Board reported that the composite index of leading economic indicators fell 0.1% after a revised 0.1% decline during December. The latest drop matched Consensus expectations. It was the fifth decline in the [...]

U.S. Leading Economic Indicators Down

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221c.jpg" align="left" border="0" height="265" width="353">
French inflation is showing pressure. In January the Yr/Yr
HICP pace is up to 3.2% from 1.4% in the previous 12-month period. The
CPI excl food and energy rate is up to 2% from 1.4% a year ago. The
3-month CPI excl food and energy pace is a bit lower than it was over
six months, but it is still above the 2% mark. While the main CPI
categories show that 90% of them have inflation higher than it was a
year ago, 72% have higher inflation over six months that over 12-months
but only 54% have higher inflation over three months than over
6-months, Clothing and Communications inflation is cooling the fastest.
Education plus food and energy intensive categories show the most
inflation pressure. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> France HICP and CPI details</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">HICP Total</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.7%</td>
<td>5.9%</td>
<td>4.6%</td>
<td>3.2%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Core&nbsp;</td>
<td>--</td>
<td>0.3%</td>
<td>0.3%</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>1.4%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">CPI</td>
</tr>
<tr class="grey2">
<td class="firstcol">All</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.6%</td>
<td style="color: red;">5.4%</td>
<td style="color: red;">4.0%</td>
<td>2.9%</td>
<td>1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI excl Food and Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.6%</td>
<td style="color: red;">2.8%</td>
<td>2.0%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food</td>
<td>1.2%</td>
<td>0.6%</td>
<td>0.4%</td>
<td style="color: red;">8.8%</td>
<td style="color: red;">8.1%</td>
<td style="color: red;">4.4%</td>
<td>1.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Alcohol</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.8%</td>
<td style="color: red;">7.0%</td>
<td style="color: red;">4.5%</td>
<td>0.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Clothing &amp; Shoes</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-2.0%</td>
<td>0.2%</td>
<td style="color: red;">0.6%</td>
<td>0.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Rent &amp; Utilities</td>
<td>0.5%</td>
<td>0.6%</td>
<td>1.1%</td>
<td style="color: red;">9.0%</td>
<td style="color: red;">6.7%</td>
<td style="color: red;">4.7%</td>
<td>3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Health Care</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.0%</td>
<td style="color: red;">0.4%</td>
<td style="color: red;">0.3%</td>
<td>0.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Transport</td>
<td>0.1%</td>
<td>1.0%</td>
<td>1.9%</td>
<td style="color: red;">13.0%</td>
<td style="color: red;">7.7%</td>
<td style="color: red;">6.1%</td>
<td>0.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Communication</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>0.0%</td>
<td>-2.8%</td>
<td style="color: red;">0.2%</td>
<td style="color: red;">-1.2%</td>
<td>-1.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Recreation &amp; Culture</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>0.2%</td>
<td style="color: red;">-0.6%</td>
<td>-1.6%</td>
<td style="color: red;">-1.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Education</td>
<td>0.5%</td>
<td>0.2%</td>
<td>0.6%</td>
<td style="color: red;">5.1%</td>
<td style="color: red;">3.4%</td>
<td style="color: red;">3.0%</td>
<td>2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Restaurant &amp; Hotel</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.2%</td>
<td style="color: red;">3.3%</td>
<td>2.5%</td>
<td style="color: red;">2.8%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>0.0%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>1.3%</td>
<td style="color: red;">1.9%</td>
<td>1.9%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Diffusion</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>54.5%</td>
<td>72.7%</td>
<td>90.9%</td>
<td>--</td>
</tr>
<tr class="grey1">
<td class="firstcol">Type:</td>
<td colspan="3">Diffusion: Compared to</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

French inflation is showing pressure. In January the Yr/Yr HICP pace is up to 3.2% from 1.4% in the previous 12-month period. The CPI excl food and energy rate is up to 2% from 1.4% a year ago. The 3-month CPI excl food and energy [...]

French Inflation: Core and Headline Rates Move Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221a.jpg" width="353">
Initial claims for unemployment insurance fell 9,000 to 349,000 last week, but the prior week&#39;s level was revised up sharply. For February, claims so far are up 28,000, or 8.6%, from the January average. The latest weekly level remained near the highest since October of 2005.
The four-week moving average of initial claims, a measure which smoothes out most of the series&#39; w/w volatility, rose again to 360,500 (+9.2% y/y), the highest level since Summer of 2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221b.jpg" width="353">
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose 48,000 and reversed a 48,000 decline during the prior week. That decline was much deeper than reported initially. Insured unemployment stood at its highest level since Summer 2005. The figure provides some indication of workers&#39; ability to find employment.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment remained at 2.1% for the third consecutive week.
Minutes to the January meeting of the Federal Open Market Committee can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080220a.htm"> here</a>.
Recent Trends in Economic Volatility: Conference Summary from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-06.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/16/08</th>
<th scope="col">02/09/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;349</td>
<td>358</td>
<td>4.8%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,784</td>
<td>11.5%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance fell 9,000 to 349,000 last week, but the prior week's level was revised up sharply. For February, claims so far are up 28,000, or 8.6%, from the January average. The latest weekly level [...]

U.S. Weekly Initial Claims for Jobless Insurance Down, Revisions Up

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221f.jpg" align="left" border="0" height="265" width="353">
For January, the Conference Board reported that the composite
index of leading economic indicators fell 0.1% after a revised 0.1%
decline during December. The latest drop matched Consensus
expectations. It was the fifth decline in the last six months and since
the series' peak last July it has fallen 2.0%.
For all of last year the leaders fell 0.4% and the
six month growth rate, calculated as the latest month's reading divided
by the average of the prior twelve months, was -4.0%, the lowest since
early 2001.
During the last ten years there has been a 59% correlation
between the y/y change in the leading indicators index and the lagged
change in real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221g.jpg" align="right" border="0" height="265" width="353">
The breadth of one month gain amongst the 10 components of the
leading index rose slightly to a break even 50.0%. Over a six month
period, the breadth of gain amongst the leaders components cratered to
20%, equal to its lowest level since 2002.
Last month lower stock prices made the largest contribution to
the decline in the overall leading index.
The method of calculating the contribution to the leading
index from the spread between 10 year Treasury securities and the Fed
funds rate has been revised. A negative contribution will now occur
only when the spread inverts rather than when declining as in the past.
More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.
The leading index is based on eight previously reported
economic data series. Two series, orders for consumer goods and orders
for capital goods, are estimated.
The coincident indicators rose 0.1% after a 0.1% December
uptick. Over the last ten years there has been an 86% correlation
between the y/y change in the coincident indicators and real GDP
growth. Three of the four coincident series components rose very
slightly and employment fell.
The lagging index was unchanged and the ratio of coincident to
lagging indicators (a measure of economic excess) ticked up slightly
but remained near its lowest since 1991. 
Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


<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/BCI/BCI.HTM">Business
Cycle Indicators</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-1.5%</td>
<td>-0.4%</td>
<td>1.2%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.0%</td>
<td>0.2%</td>
<td>2.3%</td>
<td>3.1%</td>
<td>3.0%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Lowest
Since 2001 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 21, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221d.jpg" align="left" border="0" height="265" width="353">
The Philadelphia Federal Reserve Bank reported that it's Index
of General Business Conditions in the manufacturing sector fell to
-24.0 this month from -20.9 in January. The latest level was the lowest
since the recession year 2001.
The index is a diffusion index for each component or series.
It reflects the increase in activity reported less the decrease.
During the last ten years there has been a 59% correlation
between the level of the Philadelphia Fed Business Conditions Index and
the three-month growth in factory sector industrial production. There
has been a 42% correlation with q/q growth in real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221e.jpg" align="right" border="0" height="265" width="353">
The decline in the overall index represented broad based
declines in each of the sub indexes except new orders and the number of
employees which ticked up. 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.
The prices paid index also fell slightly after strong up moves
during the prior five months. 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 fell sharply to the lowest reading since 1990. Expectations for
new orders, shipments and for the number of employees fell sharply.
Are Shocks to the Terms of Trade, Shocks to
Productivity? from the Federal Reserve Bank of Minneapolis
can be found <a href="http://www.minneapolisfed.org/research/SR/SR391.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">&nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Feb. '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-24.0</td>
<td>-20.9</td>
<td>0.3</td>
<td>5.1</td>
<td>8.1</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>46.6</td>
<td>&nbsp;49.8</td>
<td>&nbsp;18.8</td>
<td>26.4</td>
<td>36.6</td>
<td>40.1</td>
</tr>
</tbody>
</table>
U.S. Weekly Initial Claims for
Jobless Insurance Down, Revisions Up 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 21, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221a.jpg" align="left" border="0" height="265" width="353">
Initial claims for unemployment insurance fell 9,000 to
349,000 last week, but the prior week's level was revised up sharply.
For February, claims so far are up 28,000, or 8.6%, from the January
average. The latest weekly level remained near the highest since
October of 2005.
The four-week moving average of initial claims, a measure
which smoothes out most of the series' w/w volatility, rose again to
360,500 (+9.2% y/y), the highest level since Summer of 2005.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221b.jpg" align="right" border="0" height="265" width="353">
A claims level below 400,000 typically has been associated
with growth in nonfarm payrolls. During the last ten years there has
been a (negative) 76% correlation between the level of initial claims
and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose 48,000 and
reversed a 48,000 decline during the prior week. That decline was much
deeper than reported initially. Insured unemployment stood at its
highest level since Summer 2005. The figure provides some indication of
workers' ability to find employment.
The continuing claims numbers lag the initial claims figures
by one week.
The insured rate of unemployment remained at 2.1% for the
third consecutive week.
Minutes to the January meeting of the Federal Open
Market Committee can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080220a.htm">
here</a>.
Recent Trends in Economic Volatility: Conference
Summary from the Federal Reserve Bank of San Francisco is
available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-06.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/16/08</th>
<th scope="col">02/09/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;349</td>
<td>358</td>
<td>4.8%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,784</td>
<td>11.5%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
French Inflation: Core andHeadline Rates Move Higher 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 21, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221c.jpg" align="left" border="0" height="265" width="353">
French inflation is showing pressure. In January the Yr/Yr
HICP pace is up to 3.2% from 1.4% in the previous 12-month period. The
CPI excl food and energy rate is up to 2% from 1.4% a year ago. The
3-month CPI excl food and energy pace is a bit lower than it was over
six months, but it is still above the 2% mark. While the main CPI
categories show that 90% of them have inflation higher than it was a
year ago, 72% have higher inflation over six months that over 12-months
but only 54% have higher inflation over three months than over
6-months, Clothing and Communications inflation is cooling the fastest.
Education plus food and energy intensive categories show the most
inflation pressure. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> France
HICP and CPI details</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">HICP Total</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.7%</td>
<td>5.9%</td>
<td>4.6%</td>
<td>3.2%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Core&nbsp;</td>
<td>--</td>
<td>0.3%</td>
<td>0.3%</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>1.4%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">CPI</td>
</tr>
<tr class="grey2">
<td class="firstcol">All</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.6%</td>
<td style="color: red;">5.4%</td>
<td style="color: red;">4.0%</td>
<td>2.9%</td>
<td>1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI excl Food and Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.6%</td>
<td style="color: red;">2.8%</td>
<td>2.0%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food</td>
<td>1.2%</td>
<td>0.6%</td>
<td>0.4%</td>
<td style="color: red;">8.8%</td>
<td style="color: red;">8.1%</td>
<td style="color: red;">4.4%</td>
<td>1.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Alcohol</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.8%</td>
<td style="color: red;">7.0%</td>
<td style="color: red;">4.5%</td>
<td>0.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Clothing &amp; Shoes</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-2.0%</td>
<td>0.2%</td>
<td style="color: red;">0.6%</td>
<td>0.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Rent &amp; Utilities</td>
<td>0.5%</td>
<td>0.6%</td>
<td>1.1%</td>
<td style="color: red;">9.0%</td>
<td style="color: red;">6.7%</td>
<td style="color: red;">4.7%</td>
<td>3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Health Care</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.0%</td>
<td style="color: red;">0.4%</td>
<td style="color: red;">0.3%</td>
<td>0.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Transport</td>
<td>0.1%</td>
<td>1.0%</td>
<td>1.9%</td>
<td style="color: red;">13.0%</td>
<td style="color: red;">7.7%</td>
<td style="color: red;">6.1%</td>
<td>0.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Communication</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>0.0%</td>
<td>-2.8%</td>
<td style="color: red;">0.2%</td>
<td style="color: red;">-1.2%</td>
<td>-1.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Recreation &amp; Culture</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>0.2%</td>
<td style="color: red;">-0.6%</td>
<td>-1.6%</td>
<td style="color: red;">-1.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Education</td>
<td>0.5%</td>
<td>0.2%</td>
<td>0.6%</td>
<td style="color: red;">5.1%</td>
<td style="color: red;">3.4%</td>
<td style="color: red;">3.0%</td>
<td>2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Restaurant &amp; Hotel</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.2%</td>
<td style="color: red;">3.3%</td>
<td>2.5%</td>
<td style="color: red;">2.8%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>0.0%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>1.3%</td>
<td style="color: red;">1.9%</td>
<td>1.9%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Diffusion</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>54.5%</td>
<td>72.7%</td>
<td>90.9%</td>
<td>--</td>
</tr>
<tr class="grey1">
<td class="firstcol">Type:</td>
<td colspan="3">Diffusion: Compared to</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220g.jpg" align="left" border="0" height="265" width="353">
The UK&#8217;s CBI report is a survey which reports purchaser type
survey data as net measures (net better Vs worse responses). The report
shows that output trends, while still showing expansion, have moved
substantially lower. Order trends have been hovering; they show small
net positive readings. This month the order series even ticked higher
to a net +3 from +2 in January. Output volume expected in the next
three months has improved a bit too. At +11 in February it is up from
+9 in January and +3 in December. Still, it is a reading that is still
below its 12-month average of 14. But prices are the real headline of
this report. Price pressures continue to rise. At +22 they are
accelerating and are above their 12-month average of 18. Prices for the
next 3 months stand in the 95th percentile of their range. This is
stronger than for orders or export orders where the rankings show them
in the top 79th to 88th percentile of their ranges. Output is only in
the top 30% of its range. While the BOE is cutting rates the output and
orders barometers in this report are still firm but price expectations
are pushing their limits. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">UK
Industrial Volume Data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>12-mo Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>2</td>
<td>2</td>
<td>8</td>
<td>-6</td>
<td>4</td>
<td>86%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-4</td>
<td>2</td>
<td>-4</td>
<td>-9</td>
<td>-3</td>
<td>87%</td>
<td>3</td>
<td>-50</td>
<td>53</td>
</tr>
<tr>
<td class="firstcol">Stocks: Final Goods</td>
<td>7</td>
<td>14</td>
<td>14</td>
<td>14</td>
<td>9</td>
<td>32%</td>
<td>26</td>
<td>-2</td>
<td>28</td>
</tr>
<tr>
<td class="firstcol">Output Volume: Next 3M</td>
<td>9</td>
<td>3</td>
<td>9</td>
<td>10</td>
<td>15</td>
<td>66%</td>
<td>28</td>
<td>-28</td>
<td>56</td>
</tr>
<tr>
<td class="firstcol">Averages Prices for Next 3M</td>
<td>21</td>
<td>15</td>
<td>21</td>
<td>14</td>
<td>18</td>
<td>93%</td>
<td>25</td>
<td>-30</td>
<td>55</td>
</tr>
<tr class="grey2">
<td colspan="10" class="firstcol">From end
2000</td>
</tr>
</tbody>
</table>
</body></html>

The UK’s CBI report is a survey which reports purchaser type survey data as net measures (net better Vs worse responses). The report shows that output trends, while still showing expansion, have moved substantially lower. Order trends [...]

UK Output Trends Decline as Orders Hover Showing Small Persisting Gains

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220f.jpg" align="left" border="0" height="265" width="353">
The German inflation picture remains a bit hotter than the ECB
would have liked. With headline PPI inflation up by 0.7% the core was
up by 0.4%. Over the past 12 months, headline MFG inflation is at 3.2%
the same as it was a year ago. Excluding energy MFG inflation fell to
2.4% Yr/Yr from 3% a year ago.

Sequential growth rates show that ex energy inflation is very
sticky above 2%. Meanwhile, headline inflation has continued to build
pressures in terms of these sequential rates.

Basic goods prices rose by 0.7% in January and by 2.6% Yr/Yr.
Capital goods prices rose by 0.1% and are higher Yr/Yr by 0.7%.
Consumer goods prices rose by 0.5% in January but were up a strong 3.9%
Yr/Yr. Energy prices were by 2.1% in January and by 5.9% Yr/Yr.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Germany
PPI</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo Year Ago</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.7%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>6.9%</td>
<td>4.6%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.4%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.4%</td>
<td>3.0%</td>
</tr>
</tbody>
</table>
</body></html>

The German inflation picture remains a bit hotter than the ECB would have liked. With headline PPI inflation up by 0.7% the core was up by 0.4%. Over the past 12 months, headline MFG inflation is at 3.2% the same as it was a year ago. [...]

German PPI Inflation Shows Stubbornness

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220e.jpg" align="left" border="0" height="265" width="353">
French and Italian orders have shown some consistency in
recent years in their oscillations. Currently Italy&#8217;s trends are a bit
flatter and the French trends are still a bit stronger but both saw
clear evidence of losing momentum as 2008 approaches.

Over the last three months Italy&#8217;s orders are off at a 13.1%
pace; French orders are off at a 0.3% pace for the same period. Italy&#8217;s
foreign orders are off over 12, 6 and 3 months and are showing
progressively worse results. French foreign orders are up weakly over
12 months and are lower over 6 months but have made a minor rebound in
the recent three months. So while French foreign order trends are
better than Italian trends they are still not solid&#8230;For the fourth
quarter, French orders are dropping at a 3.8% pace Q/Q while Italy&#8217;s
orders are dropping at a 3.3% annual pace. France&#8217;s foreign orders are
holding up better with a mere 4% drop annualized in Q4 compared to
Italy where the annual rate of decline for foreign orders is 15%.

The Euro Area is now showing some signs of growth erosion and
we cannot tell if it is the strong euro at work or the effects of
financial distress and lowered expectations that are having the largest
impact. But France and Italy are showing signs of wear on tear in their
respective industrial sectors.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-5.4%</td>
<td>2.9%</td>
<td>-1.1%</td>
<td>-14.1%</td>
<td>-8.8%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-8.1%</td>
<td>3.9%</td>
<td>-5.8%</td>
<td>-34.6%</td>
<td>-23.1%</td>
<td>-0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>-4.1%</td>
<td>2.5%</td>
<td>1.5%</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>-2.7%</td>
<td>0.2%</td>
<td>-0.7%</td>
<td>-12.0%</td>
<td>-4.0%</td>
<td>-2.8%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">French Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-2.0%</td>
<td>-0.3%</td>
<td>2.2%</td>
<td>-0.3%</td>
<td>-7.0%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-1.0%</td>
<td>1.1%</td>
<td>0.5%</td>
<td>2.5%</td>
<td>-9.3%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
</body></html>

French and Italian orders have shown some consistency in recent years in their oscillations. Currently Italy’s trends are a bit flatter and the French trends are still a bit stronger but both saw clear evidence of losing momentum as [...]

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

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

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

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

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

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

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

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Charts of the Week: Tariff Truce, Tenuous Trust

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U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

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- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

U.S. Light Vehicle Sales Fall in April

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The ISM Purchasing Managers Index of activity in the manufacturing sector slipped to 48.7 in April from 49.0 during March and 50.3 in February. It remained up from a low of 46.9 in October of last year. A level of 50 is the break-even point between a rising and falling level of activity. The Action Economics Forecast Survey expected a reading of 47.8 for April. The series reached a monthly high of 63.8 in March 2021.

Two of the five component indexes weakened last month. The April production index fell to 44.0 after declining to 48.3 in March. It was the lowest level since May 2020. A lessened 19.8% (NSA) of respondents reported higher production while an increased 24.2% reported lower output. The inventories index declined to 50.8 last month from 53.4 in March. The index remained up from a low of 43.2 in October of last year.

Moving higher, the new orders index rose to 47.2 last month from 45.2 in March. The index remained below a January high of 55.1. Twenty-eight percent (NSA) of respondents reported higher new orders while 26.7% reported a decline. The employment index rose to 46.5 from 44.7 in March. It was below a high of 50.3 in January. A greater 13.1% (NSA) of respondents reported more hiring while a fewer 16.2% indicated less. The supplier delivery index rose to 55.2 from 53.5 in March. A higher 16.6% (NSA) of respondents reported slower delivery speeds while a fairly steady 6.2% reported a quickening.

The prices index, which is not part of the composite series, edged up to 69.8 (NSA) in April after increasing to 69.4 in March. It was the highest level since June 2022, up from a December 2022 low of 39.4. An increased 49.2% of respondents reported higher prices last month, up from 12.2% in November, while a higher 9.7% reported lower prices.

In other series, the export orders index plummeted to 43.1 in April from 49.6 during March. It was down from the high of 52.4 in January. The imports index fell sharply to 47.1 from 50.1 in March. It was the lowest reading since December 2023. The order backlog index dropped to 43.7 (NSA) last month from 44.5 in March. It was the lowest level in five months.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

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- Declines in last three months follow earlier improvement.
- Production & inventories account for m/m shortfall.
- Prices index edges up to another three-year high.

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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The value of construction put in place unexpectedly fell 0.5% m/m in March after rises of 0.6% in February (+0.7% initially) and 0.1% in January (-0.5% previously), data from the U.S. Census Bureau showed. The March reading was the first m/m fall following five straight m/m gains. A 0.3% m/m March rise had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase decelerated to 2.8% in March, the lowest since May 2019, after registering at 3.4% in February and January. The latest y/y figure was lower than 8.7% in March 2024; thus, having remained below its recent high of 9.8% in January 2024 and a peak of 18.6% in April 2022.

Private construction slid 0.6% (+2.3% y/y) in March, down for the first time since September, following increases of 0.7% in February (+0.9% initially) and 0.1% in January (-0.7% previously). Residential private construction fell 0.4% (+2.8% y/y) in March, the first m/m fall in six months, after an unrevised 1.3% gain in February. Home improvement building dropped 1.2% (+13.4% y/y), the first m/m decline since December, following a 2.3% February gain; it was 41.1% of the residential private construction. Single-family building edged up 0.1% (-0.8% y/y), the smallest of seven consecutive m/m increases, after a 0.8% February rise; it was 46.6% of the residential private construction. Meanwhile, multi-family building was essentially unchanged m/m (-12.1% y/y) in March following 15 straight m/m decreases; it was 12.3% of the residential private construction.

Nonresidential private construction fell 0.8% (+1.6% y/y) in March after a 0.1% increase in February (+0.4% initially) and a 0.1% easing in January (-0.2% previously). The March fall reflected m/m drops in the following nonresidential private constructions. These included religious (-2.9%; +16.4% y/y), health care (-2.2%; -5.2% y/y), office (-1.8%; +2.7% y/y), educational (-1.7%; -4.2% y/y), lodging (-1.6%; -1.0% y/y), commercial (-1.0%; -5.8% y/y), manufacturing (-0.4%; +3.6% y/y), communication (-0.3%; +2.2% y/y), and utilities (-0.1%; +7.0% y/y). In contrast, private constructions for amusement & recreation (1.5%; 7.0% y/y) and transportation (0.7%; 10.2% y/y) rose m/m in March.

The value of public construction declined 0.2% (+4.7% y/y) in March after holding steady in February (+0.2% initially), reflecting a 0.2% increase (-1.9% y/y) in residential public construction and a 0.2% easing (+4.8% y/y) in nonresidential public construction. The March decline reflected m/m drops in the following nonresidential public constructions. These included utilities (-4.8%; -12.8% y/y), commercial (-1.6%; +40.3% y/y), amusement & recreation (-1.0%; +19.1% y/y), educational (-0.6%; +7.6% y/y), sewage & waste disposal (-0.6%; +10.6% y/y), and health care (-0.4%; +13.0% y/y). Notably, spending on highways & streets, which made up 28.7% of public construction spending, fell 0.5% (-2.4% y/y) in March, the first m/m fall since October, following a 0.9% increase in February. To the upside, the following public constructions rose m/m in March: office (1.6%; 6.0% y/y), transportation (1.4%; 7.3% y/y), public safety (0.7%; 4.1% y/y), conservation & development (0.6%; 4.7% y/y), and water supply (0.6%; 12.2% y/y).

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

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- March construction spending -0.5% m/m; +2.8% y/y, the lowest y/y rate since May ’19.
- Residential private construction -0.4% m/m, led by a 1.2% drop in home improvement building.
- Nonresidential private construction -0.8% m/m, down for the second month in three.
- Public sector construction -0.2% m/m, reflecting a 0.2% decline in nonresidential public building.

U.S. Construction Spending Unexpectedly Drops in March, the First M/M Fall Since September

Carol Stone, CBE

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Initial claims for unemployment insurance rose 18,000 in the week ended April 26 to 241,000, seasonally adjusted.  This is higher by 16,000 than the Action Economics Forecast Survey amount of 225,000 and is the largest amount since the week of February 22. The previous week’s actual count was revised up by 1,000 to 223,000, from 222,000 reported initially.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” – in the week ended April 19 was 1.916 million, up 83,000 from the prior week’s 1.833 million; that earlier amount was revised down by 8,000.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, was 1.3% in the April 19 week, following 1.2% continuously since the week of January 6, 2024.

Economic conditions vary widely across states and territories.  In the week ended April 12, the highest unemployment rates were in New Jersey (2.39%), California (2.24%), Washington (2.19%), Rhode Island (2.17%) and Massachusetts (1.93%).  The lowest rates were in Florida (0.35%), South Dakota (0.40%), Alabama (0.41%), Virginia (0.45%) and Tennessee (0.48%).  Rates in other notable states include the Illinois (1.85%), New York (1.71%), Pennsylvania (1.54%) and Texas (1.09%). 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 U**SECON**. 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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- Actual initial claims amount is 16,000 more than forecast.
- Total beneficiaries rose by 83,000.
- Insured unemployment rate ticked up to 1.3% after 15 months at 1.2%.

Economy in Brief: February 2008

Jump to:

Philadelphia Fed Index Lowest Since 2001

U.S. Leading Economic Indicators Down

French Inflation: Core and Headline Rates Move Higher

U.S. Weekly Initial Claims for Jobless Insurance Down, Revisions Up

U.S. Leading Economic Indicators Down

UK Output Trends Decline as Orders Hover Showing Small Persisting Gains

German PPI Inflation Shows Stubbornness

New Industrial Orders in December Sag in Italy and in France