Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060317b.jpg" width="353">
The index of consumer sentiment remained unchanged early this month versus February at 86.7, according to the University of Michigan. Consensus expectations for an increase to 88.0.
Sentiment figures are not seasonally adjusted and during the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
The current conditions index ticked up 0.6% m/m after a 4.3% decline during February. The index of personal finances rose just 0.9% (-3.4% y/y) after the 5.1% February collapse and the reading of buying conditions for large household goods remained unchanged (-0.6% y/y). Consumers&#39; assessment of gov&#39;t economic policy fell to the lowest level this year. The index level of 80 (-14.0% y/y) compared to an average of 88 during 2005.
Consumer expectations slipped 0.4% from February, the third consecutive monthly decline. The economic outlook deteriorated sharply with the index of expected business conditions during the next twelve months off 5.2% (-12.5% y/y).
The mean expected inflation rate for the next twelve months rose m/m to 3.8%, still well below the 5.5% expected in October &amp; September.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
Consumer Sentiment, the Economy, and the News Media from the Federal Reserve board can be found <a href="http://www.federalreserve.gov/pubs/feds/2004/200451/200451abs.html"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">March (p)</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>86.7</td>
<td>86.7</td>
<td>-6.4%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>106.2</td>
<td>105.6</td>
<td>-1.7%</td>
<td>105.9</td>
<td>105.6</td>
<td>97.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>74.2</td>
<td>74.5</td>
<td>-10.4%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
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The index of consumer sentiment remained unchanged early this month versus February at 86.7, according to the University of Michigan. Consensus expectations for an increase to 88.0. Sentiment figures are not seasonally adjusted and [...]

U.S. Consumer Sentiment Unchanged

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060317a.jpg" width="353">
Overall industrial output surged an expected 0.7% during February. The rise, however, was entirely due to a 7.9% rebound in utility output as winter temperatures returned to normal. Utility output had fallen 11.5% during the record warm January.
Factory sector production was unchanged following the upwardly revised 0.8% January increase and m/m declines in output were widespread amongst industries.
Motor vehicles &amp; parts fell 0.8% (-2.0% y/y) after a 2.4% spurt in January. Excluding motor vehicles, factory output inched up 0.1% (4.8% y/y). That increase very much reflected a 1.2% (19.0% y/y) jump in output of computer &amp; electronic components. Excluding both autos and high tech, factory output was unchanged (+3.6% y/y) during February.
Output of primary metals slipped 0.1% (+4.2% y/y) last month and the 0.5% (+4.6% y/y) decline in machinery output was the second in a row. Electrical equipment &amp; appliance output dropped 1.7% (+7.3% y/y) but furniture &amp; related products output rose 1.3% (-1.6% y/y).
The 0.2% decline (+1.5% y/y) in nondurables output reflected a 0.5% (+2.4% y/y) fall in apparel output and a 1.8% (-4.2% y/y) drop in petroleum &amp; coal production.
Total capacity utilization rose to 81.2% although factory sector utilization reversed a bit of the prior month&#39;s jump and fell to 80.4% versus an average 78.9% during 2005.
Greenspan&#39;s Unconventional View of the Long-Run Inflation/Output Trade-off from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20060101/cover.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Industrial Production</td>
<td>0.7%</td>
<td>-0.3%</td>
<td>3.3%</td>
<td>3.2%</td>
<td>4.1%</td>
<td>0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.0%</td>
<td>0.8%</td>
<td>4.1%</td>
<td>3.9%</td>
<td>4.8%</td>
<td>0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; &nbsp; Consumer Goods</td>
<td>0.8%</td>
<td>-0.8%</td>
<td>1.8%</td>
<td>2.1%</td>
<td>2.1%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; &nbsp; Business Equipment</td>
<td>0.1%</td>
<td>1.2%</td>
<td>10.4%</td>
<td>9.1%</td>
<td>9.3%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>81.2%</td>
<td>80.8%</td>
<td>80.0% (2/05)</td>
<td>80.1%</td>
<td>78.6%</td>
<td>75.7%</td>
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Overall industrial output surged an expected 0.7% during February. The rise, however, was entirely due to a 7.9% rebound in utility output as winter temperatures returned to normal. Utility output had fallen 11.5% during the record [...]

Industrial Production Up As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060317a.jpg" width="353">
Overall industrial output surged an expected 0.7% during February. The rise, however, was entirely due to a 7.9% rebound in utility output as winter temperatures returned to normal. Utility output had fallen 11.5% during the record warm January.
Factory sector production was unchanged following the upwardly revised 0.8% January increase and m/m declines in output were widespread amongst industries.
Motor vehicles &amp; parts fell 0.8% (-2.0% y/y) after a 2.4% spurt in January. Excluding motor vehicles, factory output inched up 0.1% (4.8% y/y). That increase very much reflected a 1.2% (19.0% y/y) jump in output of computer &amp; electronic components. Excluding both autos and high tech, factory output was unchanged (+3.6% y/y) during February.
Output of primary metals slipped 0.1% (+4.2% y/y) last month and the 0.5% (+4.6% y/y) decline in machinery output was the second in a row. Electrical equipment &amp; appliance output dropped 1.7% (+7.3% y/y) but furniture &amp; related products output rose 1.3% (-1.6% y/y).
The 0.2% decline (+1.5% y/y) in nondurables output reflected a 0.5% (+2.4% y/y) fall in apparel output and a 1.8% (-4.2% y/y) drop in petroleum &amp; coal production.
Total capacity utilization rose to 81.2% although factory sector utilization reversed a bit of the prior month&#39;s jump and fell to 80.4% versus an average 78.9% during 2005.
Greenspan&#39;s Unconventional View of the Long-Run Inflation/Output Trade-off from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20060101/cover.pdf"> here</a>.

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<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Industrial Production</td>
<td>0.7%</td>
<td>-0.3%</td>
<td>3.3%</td>
<td>3.2%</td>
<td>4.1%</td>
<td>0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.0%</td>
<td>0.8%</td>
<td>4.1%</td>
<td>3.9%</td>
<td>4.8%</td>
<td>0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; &nbsp; Consumer Goods</td>
<td>0.8%</td>
<td>-0.8%</td>
<td>1.8%</td>
<td>2.1%</td>
<td>2.1%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; &nbsp; Business Equipment</td>
<td>0.1%</td>
<td>1.2%</td>
<td>10.4%</td>
<td>9.1%</td>
<td>9.3%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>81.2%</td>
<td>80.8%</td>
<td>80.0% (2/05)</td>
<td>80.1%</td>
<td>78.6%</td>
<td>75.7%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 17, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060317b.jpg" width="353">
The index of consumer sentiment remained unchanged early this month versus February at 86.7, according to the University of Michigan. Consensus expectations for an increase to 88.0.
Sentiment figures are not seasonally adjusted and during the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
The current conditions index ticked up 0.6% m/m after a 4.3% decline during February. The index of personal finances rose just 0.9% (-3.4% y/y) after the 5.1% February collapse and the reading of buying conditions for large household goods remained unchanged (-0.6% y/y). Consumers&#39; assessment of gov&#39;t economic policy fell to the lowest level this year. The index level of 80 (-14.0% y/y) compared to an average of 88 during 2005.
Consumer expectations slipped 0.4% from February, the third consecutive monthly decline. The economic outlook deteriorated sharply with the index of expected business conditions during the next twelve months off 5.2% (-12.5% y/y).
The mean expected inflation rate for the next twelve months rose m/m to 3.8%, still well below the 5.5% expected in October &amp; September.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
Consumer Sentiment, the Economy, and the News Media from the Federal Reserve board can be found <a href="http://www.federalreserve.gov/pubs/feds/2004/200451/200451abs.html"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">March (p)</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>86.7</td>
<td>86.7</td>
<td>-6.4%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>106.2</td>
<td>105.6</td>
<td>-1.7%</td>
<td>105.9</td>
<td>105.6</td>
<td>97.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>74.2</td>
<td>74.5</td>
<td>-10.4%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
</tr>
</tbody>
</table>
"All Economics Is Local": Labor Markets in US Cities 
by <a href="/comment/Stone.html">Carol Stone</a> March 17, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060317c.jpg" width="353">
This morning, the Bureau of Labor Statistics published January employment and unemployment data for US metropolitan areas. These are contained in Haver&#39;s EMPLR database. The database includes labor force, employment, unemployment and unemployment rates for states, Census regions, metro areas and smaller municipalities. The data for states and some of the metro areas are available seasonally adjusted, but the data shown here for 8 selected large US metro areas are all not seasonally adjusted.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060317d.jpg" width="353">
We spoke yesterday and the day before about labor market conditions in Europe and commented that such conditions can vary widely, even in neighboring regions there. The same is true here, as seen in the differences between Los Angeles and San Francisco. The economies of these two West Coast cities surely have differing characters, and this appears in the employment trends and the level of the unemployment rates. Employment growth in LA has generally been stronger, but the unemployment rate in San Francisco tends to be lower.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060317e.jpg" width="353">
Denver, with a fairly consistent growth trend over the past several years nevertheless has an unemployment rate slightly higher than the national average, at least in the latest month. We are pleasantly surprised by the good growth in our own locale, New York City, over the past two years, a nice cyclical rebound after the 2001 recession and the developments associated with 9/11.
Such major non-economic events can have a pointed economic impact, of course. Hurricane Katrina was devastating to the economy of New Orleans, and these figures show how dramatic that has been. Employment in the New Orleans-Metairie-Kenner MSA is off by nearly 200,000 from a year ago. The unemployment rate there is more than 50% higher than for the nation as a whole. Notably, though, employment has edged upward in the last three months. The increase totals only 2,900, but it&#39;s certainly a step in the right direction for that city.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060317f.jpg" width="353">
Finally, Houston may be a beneficiary of migration out of New Orleans. Even though the September &quot;reference week&quot; for labor market data was very soon after the storm, that month showed a marked and unusual increase in the Houston area labor force. Compared with the total drop in New Orleans, this 24,700 increase is just a fraction, but September has often been a month when the Houston labor force declines, implying that a special factor was in play. A boost to employment in Houston seems to have come just in January, when the normal post-Christmas drop in the number employed did not take place, but instead held just about steady with December. In the previous 16 years of data, the smallest decrease in January was 14,000.
It is often said that &quot;all politics is local&quot;. The widely varying developments in labor markets reported this week in both entire adjoining countries and individual US cities suggest that much of economics must be local too. 

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<th scope="col" class="firstcol">&nbsp;</th>
Jan 2006
<th scope="col">Mo/Mo % Chg</th>
<th scope="col">Jan 2005</th>
<th scope="col">Yr/Yr % Chg</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
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</thead>
<tbody>
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<td class="firstcol">Unemploy ment Rate</td>
<td>Number Employed</td>
</tr>
<tr>
<td class="firstcol">Total US</td>
<td>5.1</td>
<td>141,481</td>
<td>-1.0</td>
<td>138,682</td>
<td>2.0</td>
<td>1.8</td>
<td>1.1</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Los Angeles</td>
<td>4.9</td>
<td>6,117</td>
<td>-2.9</td>
<td>6,032</td>
<td>1.4</td>
<td>2.9</td>
<td>1.4</td>
<td>0.5</td>
</tr>
<tr>
<td class="firstcol">San Francisco</td>
<td>4.4</td>
<td>2,078</td>
<td>-3.1</td>
<td>2,067</td>
<td>0.5</td>
<td>2.2</td>
<td>-0.3</td>
<td>-2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Denver</td>
<td>5.3</td>
<td>1,238</td>
<td>-0.3</td>
<td>1,222</td>
<td>1.3</td>
<td>1.2</td>
<td>2.1</td>
<td>1.6</td>
</tr>
<tr>
<td class="firstcol">Houston</td>
<td>5.6</td>
<td>2,512</td>
<td>-0.0</td>
<td>2,422</td>
<td>3.7</td>
<td>2.4</td>
<td>1.4</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orleans</td>
<td>7.8</td>
<td>394</td>
<td>0.2</td>
<td>582</td>
<td>-32.4</td>
<td>-9.6</td>
<td>1.5</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">Chicago</td>
<td>5.6</td>
<td>4,466</td>
<td>-0.2</td>
<td>4,440</td>
<td>0.6</td>
<td>0.8</td>
<td>1.2</td>
<td>-0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Boston</td>
<td>4.7</td>
<td>2,317</td>
<td>-1.4</td>
<td>2,311</td>
<td>0.2</td>
<td>0.1</td>
<td>0.0</td>
<td>-1.3</td>
</tr>
<tr>
<td class="firstcol">New York</td>
<td>5.1</td>
<td>8,742</td>
<td>-0.5</td>
<td>8,570</td>
<td>2.0</td>
<td>1.6</td>
<td>1.3</td>
<td>-0.2</td>
</tr>
</tbody>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060316e.jpg" width="353">
Yesterday here, we talked about the persistent sluggishness of employment in the UK. A few weeks ago, we had a similar discussion about Germany. While these two large European economies are seeing their labor markets struggle, those of some other countries are doing comparatively better.
Even in France, where riots in early November highlighted the plight of one specific segment of the labor force, employment is actually rising. The increase is not large, but in Q4, there were 20,500 new jobs in manufacturing and services industries, bringing their total to 15.489 million, a new high. As in many Western countries, the gains are all in the service sector and for France, especially in consulting and other business services. Unemployment in France has also continued to decrease, with the 9.6% rate in December and January the lowest since January 2003. The sensitive youth age range, under 25, saw an uptick in January to 22.2%, but this remains below the high last May of 22.8%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060316f.jpg" width="353">
In the Netherlands, as seen in the graph, employment fell sharply in 2003, much more so than in France, but it bounced back, particularly over the past six months. While not reaching a new peak, Dutch employment has regained more than half of its 184,000 drop between February 2003 and February 2005. Unemployment in the Netherlands is falling, with the rate down to 6.1% in January from a peak of 6.7% in February 2005. By age group, progress here is actually most noticeable in the younger segments. Unemployment for those under 25 was 12.1%, compared to 13.4% early in 2005 and as high as 14.5% in late 2004. Adult workers under 45 face only 5.6% unemployment, down slightly over the past year. Older workers, ages 45-64, also have unemployment rates in the mid-5% range, but they have remained stubbornly at that level all through the past 15 months.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060316g.jpg" width="353">
In one of the smaller European nations, Slovenia, jobs have increased modestly over the last year. In January, employment was 816,600, up from an average of 813,100 for all of last year and 809,700 for January a year ago. Unemployment increased slightly this January, but it has undergone a secular decline throughout almost the entirety of Slovenia&#39;s period of independence, carrying the rate down to just over 10% from 15% in late 1992. [Note that the data collection method changed at the beginning of 2005, accounting for the sudden jump in employment then. The labor force increased by a commensurate amount so the unemployment rate was not affected.]
Thus, labor markets can behave differently even in neighboring regions and among differing demographic groups within the same region. And as we see here, big economies don&#39;t necessarily have advantages over small ones in the ability to provide job opportunities for everyone. 

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<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col"></th>
<th scope="col">Q4 2005</th>
<th scope="col">Q3 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France:&nbsp; &nbsp; Mfg &amp; Services Employees (Mil.)</td>
<td>--</td>
<td>15.49</td>
<td>15.47</td>
<td>15.44</td>
<td>15.47</td>
<td>15.42</td>
<td>15.43</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>--</td>
<td>5.13</td>
<td>5.14</td>
<td>5.18</td>
<td>5.15</td>
<td>5.20</td>
<td>5.28</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Services</td>
<td>--</td>
<td>10.35</td>
<td>10.33</td>
<td>10.26</td>
<td>10.32</td>
<td>10.22</td>
<td>10.15</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Jan 2006</td>
<td>Dec 2005</td>
<td>--</td>
<td>Year Ago</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>9.6</td>
<td>9.6</td>
<td>--</td>
<td>10.1</td>
<td>9.9</td>
<td>10.0</td>
<td>9.9</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td>&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Netherlands: Total Employment*</td>
<td>6.99</td>
<td>6.97</td>
<td>--</td>
<td>6.90</td>
<td>6.91</td>
<td>6.92</td>
<td>7.00</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>6.1</td>
<td>6.2</td>
<td>--</td>
<td>6.7</td>
<td>6.5</td>
<td>6.5</td>
<td>5.4</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Slovenia: Employment (Thous.)</td>
<td>816.6</td>
<td>816.2</td>
<td>--</td>
<td>809.7</td>
<td>813.1</td>
<td>782.2</td>
<td>777.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>10.2</td>
<td>10.3</td>
<td>--</td>
<td>10.1</td>
<td>10.1</td>
<td>10.6</td>
<td>11.2</td>
</tr>
</tbody>
</table>
</body>
</html>

Yesterday here, we talked about the persistent sluggishness of employment in the UK. A few weeks ago, we had a similar discussion about Germany. While these two large European economies are seeing their labor markets struggle, those [...]

France, Netherlands & Slovenia See Better Labor Market Conditions in Late 2005 and Early 2006

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060316h.jpg" width="353">
The March Philadelphia Fed Index of General Business Conditions in the manufacturing sector gave back 3.1 points of the 12.1 point improvement last month. The decline to 12.3 compared to Consensus expectations for a lesser decline to 14.
During the last ten years there has been a 68% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 50% correlation with q/q growth in real GDP.
Declines in the sub indexes were broad based although new orders rose sharply to the highest level since October 2004 and shipments rose moderately. Unfilled orders fell sharply as did delivery times. The index covering the number of employees halved and fell to 5.4. During the last ten years there has been a 64% correlation between the employment index and the three month growth in factory payrolls.
The business conditions index reflects a separate survey question, not the sub indexes.
The separate index of expected business conditions in six months halved and fell to 14.6. Expectations for employment also moved moderately lower.
The prices paid index fell sharply though the index of future prices fell only moderately. During the last ten years there has been a 75% correlation between the prices paid index and the three month growth in the intermediate goods PPI. The correlation with the finished goods PPI has been 50% and with the CPI it&#39;s been 43%.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0306.html">here</a>.
Global Imbalances or Bad Accounting? The Missing Dark Matter in the Wealth of Nations, analysis from the NBER and the Harvard University - John F. Kennedy School of Government is available <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=878096"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>12.3</td>
<td>15.4</td>
<td>14.2</td>
<td>12.4</td>
<td>28.0</td>
<td>10.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>17.2</td>
<td>30.5</td>
<td>28.6</td>
<td>43.5</td>
<td>51.2</td>
<td>16.8</td>
</tr>
</tbody>
</table>
</body>
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The March Philadelphia Fed Index of General Business Conditions in the manufacturing sector gave back 3.1 points of the 12.1 point improvement last month. The decline to 12.3 compared to Consensus expectations for a lesser decline to [...]

Philadelphia Fed Business Activity Index Off

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060316d.jpg" width="353">
Initial claims for unemployment insurance rose for the third consecutive week. Last week&#39;s gain of 5,000 to 309,000 followed a little revised 9,000 increase the prior period and it was to the highest level this year. Consensus expectations had been for 300,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims increased to 296,500 (-8.0% y/y), its highest level since mid-January.
Continuing unemployment insurance claims fell 49,000 to 2.445M, a five year low, and reversed all of a downwardly revised 17,000 gain the prior week.
The insured rate of unemployment was stable at 1.9% for the fifth week.
The Trend Growth Rate of Employment: Past, Present and Future from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/1q06clar.pdf"> here</a>.

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<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">03/11/06</th>
<th scope="col">03/04/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>309</td>
<td>304</td>
<td>-6.1%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,445</td>
<td>-7.6%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
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</body>
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Initial claims for unemployment insurance rose for the third consecutive week. Last week's gain of 5,000 to 309,000 followed a little revised 9,000 increase the prior period and it was to the highest level this year. Consensus [...]

Initial Claims for Jobless Insurance Higher Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060316b.jpg" width="353">
Housing starts during February reversed roughly half of the prior month&#39;s upwardly revised rise and fell 7.9% m/m to 2.120M units. More normal Winter temperatures returned last month after the record warmth of January. Consensus expectations had been for a sharper decline to 2.03M starts.
The reason for the relatively moderate decline last month was that single-family starts fell just 2.3% to 1.800M from the record high in January. The two month average of 1.822M starts was still a record height. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060316c.jpg" width="353">
A 30.4% m/m decline in multi family starts more than reversed the January surge.
Building permits also fell moderately reversing about half of February&#39;s unrevised gain with a 3.2% decline. Single family permits, however, fell hard. A 3.0% (+0.9% y/y) decline dropped single family permits to the lowest level since last May.
Single family housing starts in the Northeast fell 20.1% (-12.9% y/y) and in the Midwest starts dropped 9.2% (-15.9% y/y). Single family starts in the South fell 3.6% (+6.0% y/y) but out West starts recovered 13.3% (3.8% y/y).

<table border="0" cellspacing="0" width="100%">

</table>
<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/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a> </th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,120</td>
<td>2,303</td>
<td>-4.8%</td>
<td>2,072</td>
<td>1,950</td>
<td>1,854</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,800</td>
<td>1,843</td>
<td>-0.4%</td>
<td>1,716</td>
<td>1,604</td>
<td>1,505</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>320</td>
<td>460</td>
<td>-23.8%</td>
<td>355</td>
<td>345</td>
<td>349</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,145</td>
<td>2,216</td>
<td>2.5%</td>
<td>2,122</td>
<td>2,058</td>
<td>1,8 88</td>
</tr>
</tbody>
</table>
</body>
</html>

Housing starts during February reversed roughly half of the prior month's upwardly revised rise and fell 7.9% m/m to 2.120M units. More normal Winter temperatures returned last month after the record warmth of January. Consensus [...]

Housing Starts Decline Mostly Reflected Multi-Family

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060316a.jpg" width="353">
The February consumer price index (CPI-U) rose an expected 0.1% on the heels of the 0.7% spurt during January.
Price declines for most fuels dragged energy prices lower by 1.2%. Natural gas prices fell 4.5% (+26.8% y/y) and fuel oil prices dropped for the fifth straight month, down 2.8% (+24.2% y/y). Gasoline prices fell 1.0% (20.6% y/y) and dented the 6.4% January surge but in March, gasoline prices moved higher to $2.37 per gallon last week from the $2.28 February average.
Prices less food &amp; energy rose a modest 0.1% that was less than the 0.2% Consensus expectation. Prices for core goods fell 0.1% due to a 1.0% (-1.7% y/y) decline in apparel prices and no change (0.5% y/y) in the prices for household furnishings &amp; operation. Medical care commodity prices rose 0.3% (3.8% y/y).
A 0.3% increase in core services prices reflected a 0.4% (2.6% y/y) increase in shelter prices and a 0.5% (4.1% y/y) increase in prices for medical care services prices. School tuition &amp; fees rose 0.3% (6.2% y/y) while public transportation prices fell 0.2% (+7.5% y/y).
Click <a href="Owners%20Equivalent%20Rent%20and%20the%20Cost%20of%20Living.pdf"> here</a> for a discussion of Owners Equivalent Rent and the Cost of Living by Federal Reserve Bank of New York economist Charles Steindel. <span style="font-size:10.0pt;font-family:Verdana;
mso-fareast-font-family:&quot;Times New Roman&quot;;mso-bidi-font-family:&quot;Times New Roman&quot;;
mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA">This paper was presented at the Annual Meeting of the National Association for Business Economics (<a href="http://www.nabe.com/">www.nabe.com</a>) and later published in the January 2006 issue of the NABE journal Business Economics.
The gain in the chained CPI, which adjusts for shifts in the mix of consumer purchases, eased to 0.2% but less food &amp; energy prices rose 0.4%.
The Federal Reserve Board&#39;s latest Beige Book can be found <a href="http://www.federalreserve.gov/FOMC/BeigeBook/2006/20060315/"> 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/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> </th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.1%</td>
<td>-0.7%</td>
<td>2.6%</td>
<td>3.4%</td>
<td>2.7%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.1%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>-0.9%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.9%</td>
<td>2.8%</td>
<td>2.8%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-1.2%</td>
<td>5.0%</td>
<td>20.1%</td>
<td>16.9%</td>
<td>10.9%</td>
<td>12.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.1%</td>
<td>0.5%</td>
<td>2.8%</td>
<td>2.4%</td>
<td>3.4%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a> </td>
<td>0.2%</td>
<td>0.7%</td>
<td>3.0%</td>
<td>2.9%</td>
<td>2.5%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.4%</td>
<td>0.3%</td>
<td>1.8%</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The February consumer price index (CPI-U) rose an expected 0.1% on the heels of the 0.7% spurt during January. Price declines for most fuels dragged energy prices lower by 1.2%. Natural gas prices fell 4.5% (+26.8% y/y) and fuel oil [...]

CPI Eased: Energy Prices Lower

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.

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

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

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

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Charts of the Week: Tariff Truce, Tenuous Trust

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

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

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

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

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

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

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

U.S. Light Vehicle Sales Fall in April

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

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

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

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

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

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

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

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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

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

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

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

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

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

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

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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: March 2006

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U.S. Consumer Sentiment Unchanged

Industrial Production Up As Expected

Industrial Production Up As Expected

France, Netherlands & Slovenia See Better Labor Market Conditions in Late 2005 and Early 2006

Philadelphia Fed Business Activity Index Off

Initial Claims for Jobless Insurance Higher Again

Housing Starts Decline Mostly Reflected Multi-Family

CPI Eased: Energy Prices Lower