Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040406d.jpg" width="353">
The latest German figures on employment and unemployment were disappointing. The unemployment rate rose to 10.4% in March from 10.3% in February. The latest data on employment which are for January, show a continued decline. Some 38.2 million persons were employed, compared with a peak of 39.0 million in early 2001. In spite of the grim reports of employment and unemployment, German resistance to even modest reforms continues. Some 500,000 protesters demonstrated last weekend against Chancellor Schroeder&#39;s unpopular &quot;Agenda 2010.&quot;
In contrast to Germany, the news from Japan is encouraging. The index of leading indicators rose in February to 77.8% from 50% in January and has been at or above the 50% mark since April of 2003. A reading above 50% signals an expansion in about six months.

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The latest German figures on employment and unemployment were disappointing. The unemployment rate rose to 10.4% in March from 10.3% in February. The latest data on employment which are for January, show a continued decline. Some 38.2 [...]

Germany Disappoints Again But Japan Provides Encouragement

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040406a.jpg" width="353">
Retail gasoline prices rose last week to a record high level of $1.78 per gallon, the average US price for all formulations. That was versus an average price of $1.74 in March and an average $1.69 in March &#39;03.
Crude oil prices dropped to $34.38 for West Texas Intermediate crude by the end of last week. Prices had surged into March to a high of $38.18.
Wholesale natural gas prices backed up during the last few weeks to $5.73/mmbtu (+13.0% y/y) yesterday from the lows near $5.38 averaged during February and March.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.
&quot;Business Cycles: The Role of Energy Prices&quot; from the Federal Reserve Bank of Dallas is available <a href="http://www.dallasfed.org/research/papers/2003/wp0304.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/weekly/@W4/@W403/@W40303/@W40303.HTM"> US Retail Gasoline Prices</a></th>
<th scope="col">04/05/04</th>
<th scope="col">12/29/03</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Formulations ($/Gal.)</td>
<td>$1.78</td>
<td>$1.48</td>
<td>9.2%</td>
<td>$1.56</td>
<td>$1.34</td>
<td>$1.42</td>
</tr>
</tbody>
</table>
Chain Store Sales Tick Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 6, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040406c.jpg" width="353">
Chain store sales ticked 0.3% higher last week following a 1.9% flop during the prior period, according to the International Council of Shopping Centers (ICSC)-UBS survey.
For all of March sales fell 0.4% versus the February average.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the last ten years there has been a 51% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and consumer sentiment.

<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/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">04/03/04</th>
<th scope="col">03/27/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>432.5</td>
<td>431.0</td>
<td>7.5%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Challenger Layoffs Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 6, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040406b.jpg" width="353">
Challenger, Gray &amp; Christmas reported that announced job cuts fell 11.9% m/m following a 34.3% plunge in February. Layoffs in March were at the lowest level since last June.
The three month moving average of job cut announcements fell to 87,613 (-26.1% y/y). During the last ten years there has been an 83% (inverse) correlation between the three month average level of announced job cuts and the y/y percent change payroll employment.
The decline in layoffs was very mixed across industries. Large m/m declines in the automotive, entertainment, industrial goods, health care, food and electronics industries were partially offset by gains in the financial, pharmaceutical, chemical, energy, and government industries.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM"> Challenger, Gray &amp; Christmas</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>68,034</td>
<td>77,250</td>
<td>-20.3%</td>
<td>1,236,426</td>
<td>1,431,052</td>
<td>1,956,876</td>
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Retail gasoline prices rose last week to a record high level of $1.78 per gallon, the average US price for all formulations. That was versus an average price of $1.74 in March and an average $1.69 in March '03. Crude oil prices [...]

Gasoline Prices Up, Crude Oil Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040405b.jpg" width="353">
Purchasing Managers in the service industry in the Euro Zone reported a slowing in activity in March. The index based on a survey of 2,000 purchasing managers at service companies operating in the Euro zone compiled for Reurters Group Plc by NTC Research Ltd. declined to 54.4,from February&#39;s 56.2.
For the Euro Zone as a whole, there was a substantial decline in business expectations, which dropped 5.3% from 69.79 in February to 66.07 in March, and in new businesses which dropped 3.4% from 55.47 to 53.58.
Among the individual countries, Spain and France showed the greatest slowdowns in overall activity. No doubt, the terrorist attack in Madrid was a major factor in the Spanish slowdown.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Purchasing Managers Index Percent (&gt;50 = expansion; &lt;50 = contraction)</th>
<th scope="col">Mar 04</th>
<th scope="col">Feb 04</th>
<th scope="col">Mar 03</th>
<th scope="col">M/M &nbsp;%</th>
<th scope="col"> Y/Y %</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro Zone Total</td>
<td>54.40</td>
<td>56.22</td>
<td>47.73</td>
<td>-3.24</td>
<td>13.97</td>
<td>56.36</td>
<td>51.58</td>
<td>51.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>49.26</td>
<td>48.17</td>
<td>46.05</td>
<td>2.26</td>
<td>6.97</td>
<td>46.91</td>
<td>49.35</td>
<td>52.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; New Business</td>
<td>53.58</td>
<td>55.47</td>
<td>47.30</td>
<td>-3.41</td>
<td>13.28</td>
<td>50.85</td>
<td>51.24</td>
<td>50.11</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Business Expectations</td>
<td>66.07</td>
<td>69.79</td>
<td>59.63</td>
<td>-5.33</td>
<td>10.80</td>
<td>65.09</td>
<td>65.74</td>
<td>62.08</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>53.16</td>
<td>54.14</td>
<td>43.37</td>
<td>-1.81</td>
<td>22.74</td>
<td>48.49</td>
<td>48.62</td>
<td>48.87</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>55.86</td>
<td>58.58</td>
<td>50.90</td>
<td>-4.64</td>
<td>9.77</td>
<td>63.99</td>
<td>54.71</td>
<td>54.26</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>55.18</td>
<td>56.12</td>
<td>52.22</td>
<td>-1.67</td>
<td>5.67</td>
<td>53.34</td>
<td>52.97</td>
<td>53.91</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>53.90</td>
<td>59.09</td>
<td>49.10</td>
<td>-8.78</td>
<td>9.78</td>
<td>52.51</td>
<td>52.57</td>
<td>51.64</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>55.84</td>
<td>56.96</td>
<td>50.32</td>
<td>-1.97</td>
<td>10.97</td>
<td>53.07</td>
<td>55.29</td>
<td>51.88</td>
</tr>
</tbody>
</table>
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Purchasing Managers in the service industry in the Euro Zone reported a slowing in activity in March. The index based on a survey of 2,000 purchasing managers at service companies operating in the Euro zone compiled for Reurters Group [...]

Expansion in the Service Industries in Euro-Zone Slows

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040405a.jpg" width="353">
The Institute for Supply Management reported that the Business Activity Index for the non-manufacturing sector jumped to a new series&#39; high of 65.8 in March. Consensus expectations had been for a more moderate gain to 61.5 versus 60.8 in February.
Since the series&#39; inception in 1997 there has been a 41% correlation between the Business Activity Index and the q/q change in the GDP Service Sector Quantity Index.
The employment index improved to 53.9, the eighth month in nine above 50. Only 8% of firms reported lower employment in March, the series&#39; low.
Since the series&#39; inception in 1997 there has been a 62% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing and construction industries.
The new orders index improved to 62.8 versus 60.3 in February. These figures have varied in a range between 60 and 65 since last July.
Business activity for the non-manufacturing sector is a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components.
The seasonally adjusted prices index jumped to 65.7 from 57.3 in February. It was the third highest reading on record.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">&nbsp;Mar &#39;03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>65.8</td>
<td>60.8</td>
<td>49.1</td>
<td>58.1</td>
<td>55.1</td>
<td>48.9</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>65.7</td>
<td>57.3</td>
<td>60.1</td>
<td>56.7</td>
<td>53.9</td>
<td>51.5</td>
</tr>
</tbody>
</table>


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The Institute for Supply Management reported that the Business Activity Index for the non-manufacturing sector jumped to a new series' high of 65.8 in March. Consensus expectations had been for a more moderate gain to 61.5 versus 60.8 [...]

ISM Non-Manufacturing Index Set New High

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040402c.jpg" width="353">
The Bank of Japan (BoJ) has reorganized the key TANKAN survey, its widely followed quarterly measure of business sentiment. In the initial report, issued yesterday, April 1, the new Business Conditions reading for March is -5, compared with -11 in December. On the old survey basis, December was -15. Due to changes in the selection and grouping criteria for companies in the sample, the new data are not comparable with the old. To the extent possible, December data were reaggregated according to the structure of the new survey, so there is one historical period for comparison with actual results and with a forecast for the current period.
The BoJ made three major changes in the sample composition. Like many other countries, it reorganized the industry divisions. Similar to the US shift from &quot;SIC&quot; to &quot;NAICS&quot;, Japan is moving to the &quot;Japan Standard Industrial Classification&quot;. This captures more of the new kinds of industries that have emerged during the recent technology boom; for example, &quot;information services&quot; and &quot;communication&quot;, once subsumed in a broad &quot;services&quot; sector, are now shown separately. Secondly, the BoJ applied the results of a business census taken in 2001 to select firms for sampling. Third, it switched the method of designating businesses by size. Formerly this was judged on the basis of number of employees, but now capitalization is the criterion. This recognizes that some companies might utilize a small number of employees who actually operate a large business, such as a holding company. These changes together are thought by the BoJ to capture better the newer, more vibrant segments of the Japanese economy, which may have experienced better performance in recent years than the former industries and companies in the survey. They believe that the former survey results may have been biased downward due to its concentration on older, now less relevant industries and companies. Additionally, some concepts in the survey were redefined.
In terms of the survey results themselves, the following table indicates that business fortunes appear quite segregated by business size. Small firms are generally struggling, medium firms believe they abide in a mixed environment, and large firms are experiencing net positive performance. At the same time all major groups of companies performed better in the first quarter than they expected to. That is, the March &quot;actual&quot; is more positive or less negative than the December &quot;forecast&quot; value. Since there is no more history, it is not possible to judge whether this underestimation is a random circumstance or a habitual conservatism. Whichever would apply, large firms expanded on balance in the first quarter in both manufacturing and non-manufacturing sectors, and medium-sized manufacturing firms shifted into positive territory. Even small manufacturing companies had minimal erosion in the latest period, and they expect that to continue during the spring.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Business Conditions:&nbsp; % Favorable minus&nbsp;&nbsp;&nbsp; % Unfavorable</th>
December 2003
March 2004
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Actual</td>
<td>Forecast for March</td>
<td>Actual</td>
<td>Forecast for June</td>
</tr>
<tr>
<td class="firstcol">All Firms</td>
<td>-11</td>
<td>-12</td>
<td>-5</td>
<td>-6</td>
</tr>
<tr class="odd">
<td class="firstcol">Large Firms*</td>
<td>4</td>
<td>5</td>
<td>9</td>
<td>9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>7</td>
<td>6</td>
<td>12</td>
<td>12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Non-manufacturing</td>
<td>0</td>
<td>4</td>
<td>5</td>
<td>7</td>
</tr>
<tr>
<td class="firstcol">Medium-sized Firms**</td>
<td>-8</td>
<td>-9</td>
<td>-2</td>
<td>-2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-3</td>
<td>-4</td>
<td>5</td>
<td>1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Non-manufacturing</td>
<td>-12</td>
<td>-11</td>
<td>-7</td>
<td>-6</td>
</tr>
<tr class="odd">
<td class="firstcol">Small Firms***</td>
<td>-19</td>
<td>-20</td>
<td>-13</td>
<td>-15</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-10</td>
<td>-11</td>
<td>-3</td>
<td>-3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Non-manufacturing</td>
<td>-25</td>
<td>-27</td>
<td>-20</td>
<td>-21</td>
</tr>
</tbody>
</table>
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The Bank of Japan (BoJ) has reorganized the key TANKAN survey, its widely followed quarterly measure of business sentiment. In the initial report, issued yesterday, April 1, the new Business Conditions reading for March is -5, [...]

BoJ Restructures TANKAN Survey to Match "New Economy"; March Results Better than Companies Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040402b.jpg" width="353">
Non-farm payrolls grew in March the most for any one month since April 2000. The 308,000 jump was triple the Consensus expectation and followed upwardly revised payroll gains in February and January.
Service producing payrolls jumped 230,000 (0.8% y/y). The 0.2% monthly gain was the largest increase since May 2000. It was led by a 73,000 (0.3% y/y) rise in the trade (retail 47,100), transportation &amp; utilities category. These figures were boosted by the return of 10-20,000 striking workers.
Another standout was the professional &amp; business services category where payrolls rose 42,000 (2.2% y/y) but jobs in the temporary help services industry fell slightly (+9.6% y/y).
Government sector jobs jumped 31,000 (-0.2% y/y) and construction jobs surged 71,000 (3.0% y/y) following February&#39;s weather-depressed decline.
Manufacturing sector payrolls were unchanged, the first month factory sector payrolls did not decline since July 2000. Gains were scattered across several durable goods industries but payrolls in nondurable goods industries were mostly lower. The one-month diffusion index for manufacturing payrolls backpedaled some to 48.8%. Readings near 50 are consistent with roughly no change in payrolls.
The one-month diffusion index for private non-farm payrolls jumped to 61.0%, the highest level since July 2000. This breadth-of-change measure has had an 87% correlation with the monthly change in employment over the last ten years.
The index of aggregate hours worked (employment times hours worked) fell 0.1% following the upwardly revised no change in February. Aggregate hours in 1Q rose 1.5% (AR) versus 4Q when they rose 1.9%.
Average hourly earnings ticked higher by just 0.1% (1.8% y/y), the smallest gain in three months. Earnings in the factory sector were unchanged (2.4% y/y) following a downwardly revised February gain of 0.1%.
From the separate household survey the unemployment rate moved higher to 5.7% versus expectations for no change at 5.6%.
Household employment fell 3,000 (+0.7% y/y), the third decline in four months. The labor force jumped 179,000 (+0.6% y/y). The labor force participation rate was unchanged at 65.9% versus 67.1% averaged from 1997-2000.
An &quot;Explanatory Note&quot; from the Bureau of Labor Statistics defining the separate employment surveys is available <a href="http://bls.gov/news.release/empsit.tn.htm"> here</a> .
&quot;The Outsourcing Bogeyman&quot; from the Council on Foreign Relations can be found <a href="http://www.foreignaffairs.org/20040501faessay83301-p0/daniel-w-drezner/the-outsourcing-bogeyman.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM"> Employment</a></th>
<th scope="col"> Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>308,000</td>
<td>46,000</td>
<td>0.5%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0,000</td>
<td>-4,000</td>
<td>-2.8%</td>
<td>-4.8%</td>
<td>-7.2%</td>
<td>-4.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7</td>
<td>33.8</td>
<td>34.0</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.8%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.7%</td>
<td>5.6%</td>
<td>5.8%</td>
<td>6.0%</td>
<td>5.8%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Up Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 2, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040402a.jpg" width="353">
Unit sales of light vehicles rose slightly for the second month in March, up 1.9% to 16.68M following a 1.5% February gain. Consensus expectations were for sales of 16.7M.
Car sales rose 4.1% to 7.72M on the heels of a 5.0% gain in February. Sales of light trucks ticked just 0.1% higher following two successive months of decline.
Domestic light vehicle sales rose 1.4% m/m to 13.32M (+4.5% y/y). Imported vehicle sales (3.36M) added 3.9% in March to the 7.0% February gain (-2.3% y/y).
Imports captured 20.2% of the US market for new vehicles in March versus 19.7% during 2003.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM"> Light Vehicle Sales (SAAR, Mil.Units)</a></th>
<th scope="col"> Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.68</td>
<td>16.37</td>
<td>3.1%</td>
<td>16.69</td>
<td>16.81</td>
<td>17.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.72</td>
<td>7.41</td>
<td>-0.2%</td>
<td>7.63</td>
<td>8.07</td>
<td>8.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.96</td>
<td>8.96</td>
<td>6.1%</td>
<td>9.06</td>
<td>8.74</td>
<td>8.78</td>
</tr>
</tbody>
</table>
</body>
</html>

Non-farm payrolls grew in March the most for any one month since April 2000. The 308,000 jump was triple the Consensus expectation and followed upwardly revised payroll gains in February and January. Service producing payrolls jumped [...]

U.S. Non-farm Payrolls Soared

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040401d.jpg" width="353">
Purchasing Managers&#39; surveys in many countries showed manufacturing activity improved in March, according to a compilation published by NTC Research, an affiliate of Reuters in London. For some regions, an improving trend was extended, while in others, vigor increased after a pause in February.
New orders and output were both firmer in most countries. For example, output in Italy rose from 51.2 to 53.2 and new orders, from 52.7 to 53.7. In Japan, output was up from 56.8 to 57.9 and new orders from 57.6 to 58.4.
At the same time, another widespread phenomenon was a sharp advance in input prices. This development is less favorable for ongoing business strength. Recent commodity price trends suggest that metals and petroleum are major sources of the increases in manufacturers&#39; input prices. Petroleum in particular is a concern, as seen in the accompanying graph. Petroleum and products are priced in dollars, but even translated for the dollar&#39;s recent weakness versus the Euro, crude oil is rising in Euro terms as well. It thus remains to be seen what kind of impact these cost increases will have on the evolving world expansion in manufacturing activity. Some years ago, such increases were passed through to consumers and inflation accelerated. More recently, consumers have been less willing to take on this inflation burden and business slowdown has resulted. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">PMI Indexes, 50+=Expansion</th>
<th scope="col">Mar 2004</th>
<th scope="col">Feb 2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone</td>
<td>53.3</td>
<td>52.5</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>53.7</td>
<td>53.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Japan</td>
<td>55.3</td>
<td>54.6</td>
</tr>
<tr>
<td class="firstcol">Russia</td>
<td>53.7</td>
<td>52.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Poland</td>
<td>55.2</td>
<td>54.1</td>
</tr>
<tr>
<td class="firstcol">Memo:</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-Zone Input Prices</td>
<td>65.3</td>
<td>59.4</td>
</tr>
</tbody>
</table>
</body>
</html>

Purchasing Managers' surveys in many countries showed manufacturing activity improved in March, according to a compilation published by NTC Research, an affiliate of Reuters in London. For some regions, an improving trend was [...]

Global Manufacturing Expansion Continues, But Will Rising Energy Costs Hurt?

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040401c.jpg" width="353">
The Purchasing Managers&#146; Composite Index (PMI) for March released by the Institute of Supply Management rose to 62.5 from 61.4 in February. Consensus expectations were for a decline to 60.0.
During the last twenty years there has been a 71% correlation between the level of the Composite Index and the three month growth in factory sector industrial production. There has been a 56% correlation between the level of the Composite Index and quarterly growth in real GDP.
Higher readings for production (65.5 vs. 63.9) and employment (57.0 vs. 56.3) led the composite index higher. The index of vendor deliveries also rose to 67.9, indicating the slowest pace of vendor deliveries since April 1979.
The new orders index fell modestly to 65.7 and the inventory index fell 48.3 from 49.4.
The prices paid index surged to 86.0, the highest level since March 1980.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM"> ISM Manufacturing Survey</a></th>
<th scope="col"> Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>62.5</td>
<td>61.4</td>
<td>46.6</td>
<td>53.3</td>
<td>52.4</td>
<td>43.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>65.7</td>
<td>66.4</td>
<td>47.1</td>
<td>58.1</td>
<td>56.6</td>
<td>46.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>86.0</td>
<td>81.5</td>
<td>70.0</td>
<td>59.6</td>
<td>57.6</td>
<td>42.9</td>
</tr>
</tbody>
</table>
 Producer Prices Tame In February, Mostly 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 1, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040401a.jpg" width="353">
Finished producer prices edged just 0.1% higher in February following a 0.6% spurt the prior month. The core PPI also rose a tame 0.1% on the heels of a 0.3% January rise. A 0.3% increase in the finished goods PPI and a 0.1% rise in the core had been the Consensus expectation.
Finished consumer goods prices rose just 0.1% after the 0.7% January spurt. Less food &amp; energy finished consumer goods prices were unchanged (+1.0% y/y). Consumer durable prices fell 0.2% (+0.9% y/y) and core non-durable prices rose the same 0.2% as in January (1.0% y/y). Finished capital goods prices were unchanged (+1.1% y/y).
Strength in February was evident at the intermediate goods level where prices rose 0.9% after a 0.8% January spurt. Core intermediate prices surged 0.9%, the most for any month since January 1995. Prices for intermediate materials for durable manufacturing spiked 3.5% (8.0% y/y) and prices for construction components jumped 1.4% (4.1% y/y).
Crude goods prices spiked another 2.5%, led by a 5.5% surge in the core crude price measure. Higher prices for iron &amp; steel scrap, up 19.2% m/m and 88.1% y/y, have been quite strong due to the recovery in the factory sector. Copper prices also surged 12.2% (45.9% y/y).
Finished energy prices rose just 0.2% (3.8% y/y) in February and finished foods prices were up a like 0.2% (4.1% y/y). 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM"> Producer Price Index</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.1%</td>
<td>0.6%</td>
<td>2.1%</td>
<td>3.2%</td>
<td>-1.3%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.1%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.9%</td>
<td>0.8%</td>
<td>2.7%</td>
<td>4.7%</td>
<td>-1.5%</td>
<td>0.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.9%</td>
<td>0.6%</td>
<td>2.5%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.5%</td>
<td>2.8%</td>
<td>10.7%</td>
<td>25.0%</td>
<td>-10.6%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>5.5%</td>
<td>3.3%</td>
<td>26.2%</td>
<td>12.3%</td>
<td>3.8%</td>
<td>-10.0%</td>
</tr>
</tbody>
</table>
Jobless Claims Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 1, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040401b.jpg" width="353">
Initial claims for jobless insurance dipped 3,000 last week to 342,000 but the prior week&#39;s level was revised up sharply. The Consensus expectations had been for 340,000 claims.
The 4-week moving average of initial claims was unchanged at 340,250 (-19.1% y/y).
Continuing claims for unemployment insurance rose 32,000 in the latest week following a little-revised 47,000 drop the week prior.
The insured rate of unemployment was unchanged at 2.4%.
Comments from Federal Reserve Board Governor Ben S. Bernanke on &quot;Trade and Jobs&quot; can be found <a href="http://www.federalreserve.gov/boarddocs/speeches/2004/20040330/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col"> 3/27/04</th>
<th scope="col">3/20/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;&nbsp; 342</td>
<td>345</td>
<td>-20.8%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>3,062</td>
<td>-14.3%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
U.S. Construction Spending Edged Lower 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 1, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040401e.jpg">
The value of total construction put in place fell 0.1% in February and the previously reported 0.3% January decline was deepened to -0.8% due to lowered figures for residential and public building. No change was expected by the Consensus.
Private residential building activity fell moderately for the second consecutive month led by modest declines in single family home building (16.8% y/y). Construction on multi-family homes ticked up 1.0% (0.3% y/y) following four months of decline.
Nonresidential building rose 1.1% after a 1.8% January flop. Office building recovered just 0.3% of a 5.0% January plunge (2.7% y/y) but the health care (-2.4% y/y) and educational (+3.7% y/y) categories moved up more.
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM"> Construction Put-in-place</a></th>
<th scope="col"> Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>5.1%</td>
<td>4.0%</td>
<td>1.1%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.1%</td>
<td>-0.7%</td>
<td>7.5%</td>
<td>4.6%</td>
<td>-0.2%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>11.3%</td>
<td>10.1%</td>
<td>8.6%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>1.1%</td>
<td>-1.8%</td>
<td>-0.4%</td>
<td>-5.5%</td>
<td>-13.0%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>-1.0%</td>
<td>-1.4%</td>
<td>-2.5%</td>
<td>2.1%</td>
<td>5.3%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Purchasing Managers Composite Index (PMI) for March released by the Institute of Supply Management rose to 62.5 from 61.4 in February. Consensus expectations were for a decline to 60.0. During the last twenty years there has been [...]

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Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

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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

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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: April 2004

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