Tom Moeller

U.S. exports through February rose 22% from a year earlier. The double digit growth rate reflects broad based export gains to virtually all of America's trading partners. No doubt, the weaker foreign exchange value of the dollar is [...]

The U.S. Export Boom: Where Do They Go?

Louise Curley

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The 27 countries in the European Union reported a current
account deficit of $2.8 billion for the fourth quarter of 2007, a
decrease of $18.4 billion from the third quarter. A major factor in the
decline was the reduction in the deficit of the United Kingdom, which
declined from $29.7 billion to $8.2 billion. (See the first chart.) For
the year as a whole the deficit declined from $82.9 billion in 2006 to
$72.4 billion in 2007.
Within the European Union, the fifteen countries of the Euro
Area reported a surplus of $11.0 billion in the fourth quarter, a
decline from the $13.6 of the third year. For the entire year, 2007,
the Euro Area reported a surplus of $26.4 billion in contrast to a
deficit of $1.3 billion in 2006. The second chart compares the current
account balances of the entire EU area and the Euro Area.
In the fourth quarter the EU reported surpluses with the
United States ($33.6 bil.), Switzerland ($9.2 bil,), Canada $4.9 bil.),
India($2.2 bil.) and Hong Kong ($2.2 bil.); and deficits with China
(38.6 bil.), Russia ($8.7 bil.) and Japan ($6.2 bil.).
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422g.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422f.jpg" border="0" height="265" width="312">


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">CURRENT
ACCOUNTS IN THE EUROPEAN UNION (BIL. US$)</th>
<th scope="col">Q4 07</th>
<th scope="col">Q3 07&nbsp;</th>
<th scope="col">Q2 07&nbsp;</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">Q4 06&nbsp;</th>
<th scope="col">Q/Q Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</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">EU 27</td>
<td> -2.8</td>
<td>-21.2</td>
<td>-18.1</td>
<td>-30.4</td>
<td>-13.4</td>
<td>18.4</td>
<td>10.6</td>
<td>-72.4</td>
<td>-82.9</td>
<td>-19.6</td>
</tr>
<tr>
<td class="firstcol">U.K.
&nbsp;&nbsp;</td>
<td> -8.3</td>
<td>-29.8</td>
<td>-20.2</td>
<td>-26.9</td>
<td>-19.0</td>
<td>21.5</td>
<td>10.7</td>
<td>-85.1</td>
<td>-74.5</td>
<td>-45.3</td>
</tr>
<tr class="odd">
<td class="firstcol">EA 15&nbsp;</td>
<td> 11.0</td>
<td>13.6</td>
<td>-2.0</td>
<td>3.7</td>
<td>18.9</td>
<td>-2.6</td>
<td>-7.0</td>
<td>26.4</td>
<td>-1.3</td>
<td>18.1</td>
</tr>
<tr>
<td colspan="11" class="firstcol">EA15: Austria, Belgium,
Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg,
Portugal, Spain, Cyprus, Malta, Slovenia&nbsp;&nbsp;</td>
</tr>
<tr>
<td colspan="11" class="firstcol">EU 27:&nbsp; EA 15
Plus: Bulgaria, the Czech Republic, Denmark, Estonia, Slovakia, Sweden,
United Kingdom, Hungary, Latvia, Lithuania, Slovenia, Slovakia&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The 27 countries in the European Union reported a current account deficit of $2.8 billion for the fourth quarter of 2007, a decrease of $18.4 billion from the third quarter. A major factor in the decline was the reduction in the [...]

The European Union: Fourth Quarter Balance of Payments

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422d.jpg" width="353">
The retail price for a gallon of regular gasoline topped $3.50 last week. According to the U.S. Department of Energy survey, prices rose twelve cents w/w to a new record of $3.51 per gallon.
Higher prices on the spot market drove the rise and as of yesterday, the wholesale price of gasoline was up another six cents from last week&#39;s average.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422e.jpg" width="353">
Strength in crude oil prices is behind the strength in gasoline prices. Yesterday&#39;s price of $117.48 for a barrel of WTI crude compared to an average $114.41 last week.
Prices for natural gas also have been notably strong. The wholesale price of $10.13 per mmbtu was not a record but it was up by more than one-third from last year.
Energy and the Economy from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20080401/cover.pdf">here</a>.
Deliverability and Regional Pricing in U.S. Natural Gas Markets is a working paper from the Federal Reserve Bank of Dallas and it can be found <a href="http://dallasfed.org/research/papers/2008/wp0802.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">04/21/08</th>
<th scope="col">04/14/08</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>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.51</td>
<td>3.39</td>
<td>22.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>114.41</td>
<td>108.93</td>
<td>81.4%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>


</html>

The retail price for a gallon of regular gasoline topped $3.50 last week. According to the U.S. Department of Energy survey, prices rose twelve cents w/w to a new record of $3.51 per gallon. Higher prices on the spot market drove the [...]

U.S. Gasoline Prices Top $3.50 per Gallon

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422c.jpg" width="353">
According to the International Council of Shopping Centers ICSC-UBS Chain Store survey, sales slipped 0.7% last week and took back about all of the prior week&#39;s gain. 
Despite the latest decline sales so far in April have risen 0.8% from March, due to gains early in the month. Chain store sales in March were about unchanged from February.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the latest week the leading indicator of chain store sales from ICSC-UBS fell 0.5% (-2.0% y/y) and reversed most of the prior week&#39;s gain.
Opportunity Knocks: Selling Our Services to the Rest of the World from the Federal Reserve Bank of Dallas and it is available <a href="http://dallasfed.org/fed/annual/2007/ar07b.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">04/19/08</th>
<th scope="col">04/12/08</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>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>491.8</td>
<td>495.3</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>


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According to the International Council of Shopping Centers ICSC-UBS Chain Store survey, sales slipped 0.7% last week and took back about all of the prior week's gain.

U.S. Chain Store Sales Slip

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422a.jpg" width="353">
According to the National Association of Realtors, March sales of existing home sales fell 2.0% m/m to 4.930M. The drop reversed most of February&#39;s unrevised 2.9% increase and it was as expected.
The downward momentum behind last year&#39;s sales declines continued to look like it&#39;s flattened out. During the last three months sales were about even with the yearend &#39;07 level.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422b.jpg" width="353">
Despite a 2.6% one month rise in median home prices, the trend still is lower. The gain followed three consecutive months of decline and the three month average of home prices fell to a new cycle low, 12.6% below the high last August.
Sales of existing single family homes in March fell 2.7% to 4.350M and reversed all of February&#39;s gain.
By region, home sales in the Midwest fell a hard 6.5% (-15.9% y/y) while sales in the South also fell by 3.5% (-20.0% y/y). In the Northeast sales rose for the second consecutive month following three months of decline. Sales in the West rose a modest 2.2% after two months of decline.
The number of unsold homes on the market rose a modest 1.0% (6.6% y/y). At the current sales rate the inventory still amounts to a 9.9 months supply which is barely down from last year&#39;s peak. For single family homes there is a 9.5 months supply at the current sales rate and for condos and co-ops there is a 12.8 months supply.
New Monetary Policy Tools? from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20080501/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Single Family Home Sales (Thous)</th>
<th scope="col">March</th>
<th scope="col">y/y %</th>
<th scope="col">February</th>
<th scope="col">March &#39;07</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">Total</td>
<td>4,930</td>
<td>-19.3</td>
<td>5,030</td>
<td>6,110</td>
<td>5,672</td>
<td>6,508</td>
<td>7,076</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>910</td>
<td>-18.8</td>
<td>890</td>
<td>1,120</td>
<td>1,008</td>
<td>1,090</td>
<td>1,168</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,160</td>
<td>-15.9</td>
<td>1,240</td>
<td>1,380</td>
<td>1,331</td>
<td>1,491</td>
<td>1,589</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>1,920</td>
<td>-20.0</td>
<td>1,990</td>
<td>2,400</td>
<td>2,240</td>
<td>2,576</td>
<td>2,704</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>940</td>
<td>-22.3</td>
<td>920</td>
<td>1,210</td>
<td>1,093</td>
<td>1,353</td>
<td>1,617</td>
</tr>
<tr class="odd">
<td class="firstcol">Single-Family</td>
<td>4,350</td>
<td>-18.4</td>
<td>4,470</td>
<td>5,330</td>
<td>4,958</td>
<td>5,703</td>
<td>6,181</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>200,700</td>
<td>-7.7</td>
<td>195,600</td>
<td>217,400</td>
<td>216,617</td>
<td>222,000</td>
<td>218,217</td>
</tr>
</tbody>
</table>
</body>
</html>

According to the National Association of Realtors, March sales of existing home sales fell 2.0% m/m to 4.930M. The drop reversed most of February's unrevised 2.9% increase and it was as expected. The downward momentum behind last [...]

U.S. Existing Home Sales Fell, Prices Rose

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422a.jpg" align="left" border="0" height="265" width="353">
According to the National Association of Realtors, March sales
of existing home sales fell 2.0% m/m to 4.930M.
The drop reversed most of February's unrevised 2.9% increase and it was
as expected.
The downward momentum behind last year's sales declines
continued to look like it's flattened out. During the last three months
sales were about even with the yearend '07 level.
Despite a 2.6% one month rise in median home prices,
the trend still is lower. The gain followed three consecutive months of
decline and the three month average of home prices fell to a new cycle
low, 12.6% below the high last August.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422b.jpg" align="right" border="0" height="265" width="353">
Sales of existing single family homes in March fell 2.7% to
4.350M and reversed all of February's gain.
By region, home sales in the Midwest fell a hard 6.5% (-15.9%
y/y) while sales in the South also fell by 3.5% (-20.0% y/y). In the
Northeast sales rose for the second consecutive month following three
months of decline. Sales in the West rose a modest 2.2% after two
months of decline.
The number of unsold homes on the market rose a modest 1.0%
(6.6% y/y). At the current sales rate the inventory still amounts to a
9.9 months supply which is barely down from last year's peak. For
single family homes there is a 9.5 months supply at the current sales
rate and for condos and co-ops there is a 12.8 months supply.
New Monetary Policy Tools? from the
Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20080501/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Existing
Single Family 
Home Sales (Thous)</th>
<th scope="col">March</th>
<th scope="col">y/y %</th>
<th scope="col">February</th>
<th scope="col">March '07</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">Total</td>
<td>4,930</td>
<td>-19.3</td>
<td>5,030</td>
<td>6,110</td>
<td>5,672</td>
<td>6,508</td>
<td>7,076</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>910</td>
<td>-18.8</td>
<td>890</td>
<td>1,120</td>
<td>1,008</td>
<td>1,090</td>
<td>1,168</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,160</td>
<td>-15.9</td>
<td>1,240</td>
<td>1,380</td>
<td>1,331</td>
<td>1,491</td>
<td>1,589</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>1,920</td>
<td>-20.0</td>
<td>1,990</td>
<td>2,400</td>
<td>2,240</td>
<td>2,576</td>
<td>2,704</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>940</td>
<td>-22.3</td>
<td>920</td>
<td>1,210</td>
<td>1,093</td>
<td>1,353</td>
<td>1,617</td>
</tr>
<tr class="odd">
<td class="firstcol">Single-Family</td>
<td>4,350</td>
<td>-18.4</td>
<td>4,470</td>
<td>5,330</td>
<td>4,958</td>
<td>5,703</td>
<td>6,181</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>200,700</td>
<td>-7.7</td>
<td>195,600</td>
<td>217,400</td>
<td>216,617</td>
<td>222,000</td>
<td>218,217</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Slip 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422c.jpg" align="left" border="0" height="265" width="353">
According to the International Council of Shopping Centers
ICSC-UBS Chain Store survey, sales slipped 0.7% last week and took back
about all of the prior week's gain. 

Despite the latest decline sales so far in April have
risen 0.8% from March, due to gains early in the month. Chain store
sales in March were about unchanged from February.
During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.

The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.


During the latest week the leading indicator of chain store
sales from ICSC-UBS fell 0.5% (-2.0% y/y) and reversed most of the
prior week's gain.
Opportunity Knocks: Selling Our Services to the Rest
of the World from the Federal Reserve Bank of Dallas and it
is available <a href="http://dallasfed.org/fed/annual/2007/ar07b.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/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">04/19/08</th>
<th scope="col">04/12/08</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>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>491.8</td>
<td>495.3</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
U.S. Gasoline Prices Top $3.50 per
Gallon 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422d.jpg" align="left" border="0" height="265" width="353">
The retail price for a gallon of regular gasoline
topped $3.50 last week. According to the U.S. Department of
Energy survey, prices rose twelve cents w/w to a new record of $3.51
per gallon.
Higher prices on the spot market drove the rise and as of
yesterday, the wholesale price of gasoline was up another six cents
from last week's average.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422e.jpg" align="right" border="0" height="265" width="353">
Strength in crude oil prices is behind the strength in
gasoline prices. Yesterday's price of $117.48 for a barrel of WTI crude
compared to an average $114.41 last week.
Prices for natural gas also have been notably strong. The
wholesale price of $10.13 per mmbtu was not a record but it was up by
more than one-third from last year.


Energy and the Economy from the Federal
Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20080401/cover.pdf">here</a>.
Deliverability and Regional Pricing in U.S. Natural
Gas Markets is a working paper from the Federal Reserve Bank
of Dallas and it can be found <a href="http://dallasfed.org/research/papers/2008/wp0802.pdf">
here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">04/21/08</th>
<th scope="col">04/14/08</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>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.51</td>
<td>3.39</td>
<td>22.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>114.41</td>
<td>108.93</td>
<td>81.4%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>
The EuropeanUnion:&nbsp;
Fourth Quarter Balance of Payments 
by <a href="/comment/Curley.html">Louise
Curley</a> April 22, 2008


The 27 countries in the European Union reported a current
account deficit of $2.8 billion for the fourth quarter of 2007, a
decrease of $18.4 billion from the third quarter. A major factor in the
decline was the reduction in the deficit of the United Kingdom, which
declined from $29.7 billion to $8.2 billion. (See the first chart.) For
the year as a whole the deficit declined from $82.9 billion in 2006 to
$72.4 billion in 2007.
Within the European Union, the fifteen countries of the Euro
Area reported a surplus of $11.0 billion in the fourth quarter, a
decline from the $13.6 of the third year. For the entire year, 2007,
the Euro Area reported a surplus of $26.4 billion in contrast to a
deficit of $1.3 billion in 2006. The second chart compares the current
account balances of the entire EU area and the Euro Area.
In the fourth quarter the EU reported surpluses with the
United States ($33.6 bil.), Switzerland ($9.2 bil,), Canada $4.9 bil.),
India($2.2 bil.) and Hong Kong ($2.2 bil.); and deficits with China
(38.6 bil.), Russia ($8.7 bil.) and Japan ($6.2 bil.).
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422g.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080422f.jpg" border="0" height="265" width="312">


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">CURRENT
ACCOUNTS IN THE EUROPEAN UNION (BIL. US$)</th>
<th scope="col">Q4 07</th>
<th scope="col">Q3 07&nbsp;</th>
<th scope="col">Q2 07&nbsp;</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">Q4 06&nbsp;</th>
<th scope="col">Q/Q Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</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">EU 27</td>
<td> -2.8</td>
<td>-21.2</td>
<td>-18.1</td>
<td>-30.4</td>
<td>-13.4</td>
<td>18.4</td>
<td>10.6</td>
<td>-72.4</td>
<td>-82.9</td>
<td>-19.6</td>
</tr>
<tr>
<td class="firstcol">U.K.
&nbsp;&nbsp;</td>
<td> -8.3</td>
<td>-29.8</td>
<td>-20.2</td>
<td>-26.9</td>
<td>-19.0</td>
<td>21.5</td>
<td>10.7</td>
<td>-85.1</td>
<td>-74.5</td>
<td>-45.3</td>
</tr>
<tr class="odd">
<td class="firstcol">EA 15&nbsp;</td>
<td> 11.0</td>
<td>13.6</td>
<td>-2.0</td>
<td>3.7</td>
<td>18.9</td>
<td>-2.6</td>
<td>-7.0</td>
<td>26.4</td>
<td>-1.3</td>
<td>18.1</td>
</tr>
<tr>
<td colspan="11" class="firstcol">EA15:
Austria, Belgium,
Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg,
Portugal, Spain, Cyprus, Malta, Slovenia&nbsp;&nbsp;</td>
</tr>
<tr>
<td colspan="11" class="firstcol">EU
27:&nbsp; EA 15
Plus: Bulgaria, the Czech Republic, Denmark, Estonia, Slovakia, Sweden,
United Kingdom, Hungary, Latvia, Lithuania, Slovenia, Slovakia&nbsp;</td>
</tr>
</tbody>
</table>
IFO Weakness: A New Trend Lower or
a &#8216;Mild&#8217; Offset to a Spurious Jump? 
by <a href="/comment/Brusca.html">Robert
Brusca</a> April 24, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080424h.jpg" align="left" border="0" height="265" width="353">
Germany&#8217;s IFO index has dropped sharply in March to 102.4 from
104.8. Its current conditions index fell to 109.4 from 111.5. The April
expectations index moved lower to 96.8 from 98.4. On a Yr/Yr basis the
percentage declines in the IFO index accelerated for each of these
components (see table below). 
The readings for the IFO and its components are not yet dour,
but they clearly have weakened and are no longer strong. The Business
Climate index stands in the 73rd percentile of
its range, a firm reading. The current situation is a bit better than
that, lodged at its 78th percentile. Expectations, the forward-looking
indicator, are weaker; still standing in the 60th
percentile of their range. That is still above the midpoint but longer
looking very strong and certainly losing momentum. Expectations
readings, while above their range mid point stand at their period
average at a value of 96.8.
The sector indices tell curious stories. Compared to their
respective average values since January of 2001, all are still well
above average. But all are not well-off. Retailing is the most curious
having moved strongly higher earlier this year even as the euro was
gaining in value. But in April it is falling sharply even as it was
retaining some of those gains. The message from this sector is not
clear. It resides in the 78th percentile of its
range. In that respect it is the relative strongest of the sectors in
its range since 2001. Wholesaling is the weakest sector residing in the
65th percentile of its range. MFG Construction
and retailing are in the low seventieth percentiles of their respective
ranges. All of them fell in the month, retailing fell the mostly
sharply shedding 10 points in one month. Wholesaling lost over 6 points
on its diffusion index. Manufacturing lost about four and one-half
points.
It was not a good month for the IFO report that was generally
worse than the Zew index has suggested. The IFO&#8217;s details are yet to be
revealed. A MFG morale report from neighboring France, a fellow EMU
member, (also released today) showed that French morale was off and
that orders had dropped sharply. That result accords with the Belgian
National Bank index released on Wednesday, just one day ago. We are
getting confirming signs with similar causes about spreading weakness
in the Euro Area. Even the UK&#8217;s CBI MFG survey showed a similar pattern
of weakness made more nettlesome by reports that more firms were
passing through price increases.
The reports for the EMU in the coming months are going to be
important. On today&#8217;s weakness the Euro shed a large dollop of its
recent outsized dollar gains. The ECB rhetoric about tightening rates
has done a quick 180-degree turn, suddenly the IMF is pleased with the
state of ECB policy and the ECB itself no longer seems to threaten a
rate-hiking agenda.
What a difference a few bad economic reports can make. Stay
tuned as we try to discern how weak things will get. For its part the
German government has not cut its growth rate further for 2008 but has
lowered the outlook for 2009. In the face of all the complaining that
the euro is too strong, some of this is going have to undergo a
credibility check. If the euro is far, far above parity (and seems to
suggest that is so) then the recent strength in a number of euro
indicators would seem to at risk. More weak readings from the IFO and
its companion reports must lie ahead. All this talk of a resilient and
robust economy in Europe surely must be about to go by the boards. 
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> IFO
Survey: Germany</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="3">INDEX NUMBERS</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>CURRENT</td>
<td>Average</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Biz Climate</td>
<td>-5.7%</td>
<td>-2.7%</td>
<td>-2.7%</td>
<td>-4.2%</td>
<td>-5.3%</td>
<td>102.4</td>
<td>96.0</td>
<td>73.1%</td>
</tr>
<tr>
<td class="firstcol">Current Situation</td>
<td>-4.2%</td>
<td>-0.7%</td>
<td>-1.1%</td>
<td>-4.3%</td>
<td>-6.2%</td>
<td>108.4</td>
<td>95.2</td>
<td>78.6%</td>
</tr>
<tr>
<td class="firstcol">Biz Expectations</td>
<td>-7.2%</td>
<td>-4.7%</td>
<td>-4.4%</td>
<td>-4.1%</td>
<td>-4.3%</td>
<td>96.8</td>
<td>96.8</td>
<td>60.5%</td>
</tr>
</tbody>
</table>

</body></html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080421e.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s MFG and services sectors diverged in February. The MFG
index stands at its highest level since 1993 and in growth terms
(chart) it is accelerating to a more midrange value. The services
sector (Japan&#8217;s tertiary Index) has, however, fallen sharply. While the
service index is still strong, residing in the 87th percentile of its
range, the drop in the index is sharp and worrisome. Even in recessions
the index does not usually drop this sharply. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col">Up-to-date Japan Industry Surveys </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes: Range</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb-2008</td>
<td>Jan-2008</td>
<td>Dec-2007</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr class="odd">
<td class="firstcol">Mining and MFG</td>
<td>110.2</td>
<td>108.5</td>
<td>109.1</td>
<td>109.3</td>
<td>109.0</td>
<td>108.0</td>
<td>110.2</td>
<td>87.0</td>
<td>100.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Tertiary</td>
<td>108.4</td>
<td>110.3</td>
<td>109.9</td>
<td>109.5</td>
<td>109.9</td>
<td>110.0</td>
<td>110.9</td>
<td>91.4</td>
<td>87.2%</td>
</tr>
<tr>
<td colspan="11" class="firstcol">Ranges, Max, Min since 1993</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s MFG and services sectors diverged in February. The MFG index stands at its highest level since 1993 and in growth terms (chart) it is accelerating to a more midrange value. The services sector (Japan’s tertiary Index) has, [...]

Japan MFG and Services Indices Diverge

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080421b.jpg" align="left" border="0" height="265" width="353">
Four countries, Russia, Slovenia, Latvia and Estonia in
Eastern Europe reported Producer Price Indexes (PPI) today. Except for
Estonia where producer price inflation declined by 69 basis points in
March, the other countries showed increases: in Slovenia, a rise of 17
basis points; in Latvia, a rise of 94 basis points and in Russia a rise
of 230 basis points. The first chart shows producer price inflation in
the four countries. While increases in producer price inflation have
tended to moderate in Estonia, Latvia and Slovenia, the increase in
Russia has accelerated. In March the producer price inflation,
represented by the year to year rise in Russia's PPI was 26.6%, nearing
the peak of 28.8% reached at the end of 2004 and well above producer
price inflation in the other three countries.
Earlier this month consumer price indexes (CPI) for these
countries were released. Inflation at the consumer level, measured by
the year to year changes in the CPI is shown in the second chart and
noted in the table below. Consumer price inflation in all four
countries has shown a similar rising trend since early 2007. In
contrast to producer price inflation, it is Latvia where consumer price
inflation is currently highest at 16.7% and Russia, second highest at
13.3%. So far in 2008, inflation at the consumer level has been higher
than that at the producer level for all except Russia where producer
inflation has been twice as high as consumer price inflation. The
recent steep rise world in food prices may account for the relative
greater increase in the consumer price index since food has a greater
weight in the CPI than in the PPI. Like the rest of the world, these
countries have seen record rises in food prices as shown in the third
chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080421c.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080421d.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">PPI
AND CPI INFLATION (%)&nbsp;</th>
<th scope="col">Mar 08</th>
<th scope="col">Feb 08&nbsp;</th>
<th scope="col">Mar 07&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</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" colspan="4">PPI INFLATION&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">RUSSIA</td>
<td>26.59</td>
<td>26.38</td>
<td>5.95</td>
<td>2.30</td>
<td>20.24</td>
<td>14.30</td>
<td>12.41</td>
<td>20.55</td>
</tr>
<tr>
<td class="firstcol">SLOVENIA</td>
<td>5.71</td>
<td>5.54</td>
<td>5.01</td>
<td>0.17</td>
<td>0.70</td>
<td>5.37</td>
<td>2.34</td>
<td>2.70</td>
</tr>
<tr>
<td class="firstcol">LATVIA</td>
<td>10.47</td>
<td>11.41</td>
<td>15.99</td>
<td>0.94</td>
<td>5.52</td>
<td>16.14</td>
<td>10.36</td>
<td>7.81</td>
</tr>
<tr>
<td class="firstcol">ESTONIA</td>
<td>7.98</td>
<td>8.29</td>
<td>7.30</td>
<td>-0.69</td>
<td>0.68</td>
<td>8.27</td>
<td>4.48</td>
<td>2.11</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="4">CPI INFLATION</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">RUSSIA</td>
<td>13.29</td>
<td>12.64</td>
<td>7.39</td>
<td>0.65</td>
<td>5.90</td>
<td>9.00</td>
<td>9.68</td>
<td>12.68</td>
</tr>
<tr>
<td class="firstcol">SLOVENIA</td>
<td>6.84</td>
<td>6.52</td>
<td>2.37</td>
<td>0.32</td>
<td>4.47</td>
<td>3.61</td>
<td>2.46</td>
<td>2.49</td>
</tr>
<tr>
<td class="firstcol">LATVIA</td>
<td>16.74</td>
<td>16.88</td>
<td>8.49</td>
<td>-0.14</td>
<td>8.25</td>
<td>10.09</td>
<td>6.53</td>
<td>6.77</td>
</tr>
<tr>
<td class="firstcol">ESTONIA</td>
<td>10.94</td>
<td>11.26</td>
<td>5.71</td>
<td>-0.32</td>
<td>5.23</td>
<td>1.60</td>
<td>4.43</td>
<td>4.09</td>
</tr>
</tbody>
</table>
</body></html>

Four countries, Russia, Slovenia, Latvia and Estonia in Eastern Europe reported Producer Price Indexes (PPI) today. Except for Estonia where producer price inflation declined by 69 basis points in March, the other countries showed [...]

Producer and Consumer Price Inflation in Eastern Europe

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

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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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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%.

U.S. Initial Jobless Claims Rise Notably in April 28 Week

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

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

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

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

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

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

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

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

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

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

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

Economy in Brief: April 2008

Jump to:

The U.S. Export Boom: Where Do They Go?

The European Union: Fourth Quarter Balance of Payments

U.S. Gasoline Prices Top $3.50 per Gallon

U.S. Chain Store Sales Slip

U.S. Existing Home Sales Fell, Prices Rose

U.S. Existing Home Sales Fell, Prices Rose

Japan MFG and Services Indices Diverge

Producer and Consumer Price Inflation in Eastern Europe