Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080421a.jpg" width="353">
The National Activity Index (CFNAI) for March, published by the Chicago Federal Reserve Bank, improved slightly to -0.78 from its low February reading of -1.28. Nevertheless, the recent level was near the lowest since early 2003 and was just above the levels reached during the 2001 recession.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. During the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP. An index level at or below -0.70 typically has indicated negative U.S. economic growth.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_april2008.pdf">here</a> and the historical data are available in Haver&#39;s Surveys database.
Each of the four broad categories of indicators &#151; employment, production, consumption and housing &#151; continued to make negative contributions to the CFNAI during March.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, manufacturing &amp; trade sales, and inventories &amp; orders.
Economic Trends and the Chicago Fed National Activity Index from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2008_250.pdf"> here</a>.
Globalization and Inflation Dynamics: The Impact of Increased Competition from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr324.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/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">March</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>
<td class="firstcol">CFNAI</td>
<td>-0.78</td>
<td>-1.28</td>
<td>0.05</td>
<td>-0.42</td>
<td>-0.05</td>
<td>0.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-0.86</td>
<td>-0.92</td>
<td>-0.41</td>
<td>-0.34</td>
<td>-0.03</td>
<td>0.26</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Activity Index (CFNAI) for March, published by the Chicago Federal Reserve Bank, improved slightly to -0.78 from its low February reading of -1.28. Nevertheless, the recent level was near the lowest since early 2003 and [...]

Chicago Fed Index Indicates Recession

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080421a.jpg" align="left" border="0" height="265" width="353">
The National Activity Index (CFNAI) for March, published by
the Chicago Federal Reserve Bank, improved slightly to -0.78 from its
low February reading of -1.28. Nevertheless, the recent level was near
the lowest since early 2003 and was just above the levels reached
during the 2001 recession.
A zero value of the CFNAI indicates that the economy is
expanding at its historical trend rate of growth of roughly 3%. During
the last twenty years there has been a 68% correlation between the
level of the CFNAI and q/q growth in real GDP. An index level at or
below -0.70 typically has indicated negative U.S. economic growth.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_april2008.pdf">here</a>
and the historical data are available in Haver's Surveys
database.
Each of the four broad categories of indicators &#8212; employment,
production, consumption and housing &#8212; continued to make negative
contributions to the CFNAI during March.
The CFNAI is a weighted average of 85 indicators of economic
activity. The indicators reflect activity in the following categories:
production &amp; income, the labor market, personal consumption
&amp; housing, manufacturing &amp; trade sales, and inventories
&amp; orders.
Economic Trends and the Chicago Fed National Activity
Index from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2008_250.pdf">
here</a>.
Globalization and Inflation Dynamics: The Impact of
Increased Competition from the Federal Reserve Bank of New
York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr324.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/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">March</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>
<td class="firstcol">CFNAI</td>
<td>-0.78</td>
<td>-1.28</td>
<td>0.05</td>
<td>-0.42</td>
<td>-0.05</td>
<td>0.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-0.86</td>
<td>-0.92</td>
<td>-0.41</td>
<td>-0.34</td>
<td>-0.03</td>
<td>0.26</td>
</tr>
</tbody>
</table>
&nbsp;Producer and
ConsumerPrice Inflation in Eastern Europe&nbsp; 
by <a href="/comment/Curley.html">Louise
Curley</a> April 21, 2008


<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>
Japan MFG and Services Indices
Diverge 
by <a href="/comment/Brusca.html">Robert
Brusca</a> April 21, 2008


<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>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080418a.jpg" align="left" border="0" height="265" width="353">
Germany&#8217;s manufacturing PPI surged by 0.5% in March elevating
the 12-month inflation rate to 4.2% and keeping inflation accelerating
from 12 months to three months, as the three-month rate climbed to 6.4%
(saar). Ex-energy the inflation acceleration is even clearer: from 2.8%
over twelve months, to 3.1% over six months, to 4.7% over three months.
In Q1 2008 the PPI is also too high for comfort. The manufacturing PPI
is up at a 6.2% annual rate compared to a 3.5% annual rate for
manufacturing excluding energy.
This result is, of course, for one of the low-inflation EMU
nations. The non-energy PPI has risen by 0.4% in each of the past three
months in Germany. We know that the ECB has just reset forecasts to
account for a longer period during which inflation will supersede its
ceiling of 2% (HICP inflation, not PPI inflation). The pressure at the
producer level in Germany mirrors a similar situation in the US.
Producer level prices are soaring but consumer level prices have been
better behaved even when we compare apples-to-apples (core goods PPI to
core goods CPI). Are these pressures that are building up at the
producer level going to spring forth in the coming quarters in the CPI
(HICP)? Or, has productivity
kept the pressures off the CPI and will these PPI pressures remain
largely at bay? The ECB is worried about second round effects and is
monitoring wage agreement as well as firms hiking prices to recoup past
energy/food price gains. For the moment the results are unclear but the
expected date for inflation&#8217;s return to below its ceiling is being
pushed out and the ECB is remaining vigilant. The ECB expresses
concerns about inflation as well as about slowing growth but has set
policies only to keep inflation at bay. In the US the policy tact is
the opposite. Since Germany gives us some of the better inflation
trends in EMU, it&#8217;s no wonder that the ECB is so worried.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">Germany PPI
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Mar-08</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-moY-Ago</td>
<td>IN Q1</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.5%</td>
<td>0.6%</td>
<td>0.5%</td>
<td>6.4%</td>
<td>6.5%</td>
<td>4.2%</td>
<td>2.5%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.4%</td>
<td>0.4%</td>
<td>0.4%</td>
<td>4.7%</td>
<td>3.1%</td>
<td>2.8%</td>
<td>3.0%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
</body></html>

Germany’s manufacturing PPI surged by 0.5% in March elevating the 12-month inflation rate to 4.2% and keeping inflation accelerating from 12 months to three months, as the three-month rate climbed to 6.4% (saar). Ex-energy the [...]

German PPI Spurts in March

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080418a.jpg" align="left" border="0" height="265" width="353">
Germany&#8217;s manufacturing PPI surged by 0.5% in March elevating
the 12-month inflation rate to 4.2% and keeping inflation accelerating
from 12 months to three months, as the three-month rate climbed to 6.4%
(saar). Ex-energy the inflation acceleration is even clearer: from 2.8%
over twelve months, to 3.1% over six months, to 4.7% over three months.
In Q1 2008 the PPI is also too high for comfort. The manufacturing PPI
is up at a 6.2% annual rate compared to a 3.5% annual rate for
manufacturing excluding energy.
This result is, of course, for one of the low-inflation EMU
nations. The non-energy PPI has risen by 0.4% in each of the past three
months in Germany. We know that the ECB has just reset forecasts to
account for a longer period during which inflation will supersede its
ceiling of 2% (HICP inflation, not PPI inflation). The pressure at the
producer level in Germany mirrors a similar situation in the US.
Producer level prices are soaring but consumer level prices have been
better behaved even when we compare apples-to-apples (core goods PPI to
core goods CPI). Are these pressures that are building up at the
producer level going to spring forth in the coming quarters in the CPI
(HICP)? Or, has productivity
kept the pressures off the CPI and will these PPI pressures remain
largely at bay? The ECB is worried about second round effects and is
monitoring wage agreement as well as firms hiking prices to recoup past
energy/food price gains. For the moment the results are unclear but the
expected date for inflation&#8217;s return to below its ceiling is being
pushed out and the ECB is remaining vigilant. The ECB expresses
concerns about inflation as well as about slowing growth but has set
policies only to keep inflation at bay. In the US the policy tact is
the opposite. Since Germany gives us some of the better inflation
trends in EMU, it&#8217;s no wonder that the ECB is so worried.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr> <th colspan="9" scope="col">Germany PPI
</th></tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Mar-08</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-moY-Ago</td>
<td>IN Q1</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.5%</td>
<td>0.6%</td>
<td>0.5%</td>
<td>6.4%</td>
<td>6.5%</td>
<td>4.2%</td>
<td>2.5%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.4%</td>
<td>0.4%</td>
<td>0.4%</td>
<td>4.7%</td>
<td>3.1%</td>
<td>2.8%</td>
<td>3.0%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080417f.jpg" width="353">
The composite index of leading economic indicators, reported by the Conference Board, increased 0.1% in March after an unrevised 0.3% February decline. It was the leaders&#39; first increase in six months.
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.
The breadth of one month increase amongst the 10 components of the leading index improved to 60%. It was the first month over the break even level of 50% since last September. Over a six month period, however, the breadth of gain amongst the leaders components remained quite low at 30%.
Last month, a more positive yield spread between the 10 Year Treasury Bond and the Fed funds rate, stronger money supply growth and vendor performance made the largest positive contributions to the leading index. That was offset by lower stock prices, lower consumer expectations and higher claims for jobless insurance. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080417g.jpg" width="353">
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate has been revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.1% or the first gain in five months. Over the last ten years there has been an 86% correlation between the y/y change in the coincident indicators and real GDP growth. Half of the coincident series components fell.
The lagging index rose again as the average duration of unemployment rose. The ratio of coincident to lagging indicators (a measure of economic excess) fell yet again and was at its lowest since early 1991. 
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Dec., 6 Month % (AR)</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>-3.3%</td>
<td>-0.4%</td>
<td>1.3%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>1.7%</td>
<td>2.4%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.9%</td>
<td>2.9%</td>
<td>3.1%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>


</html>

The composite index of leading economic indicators, reported by the Conference Board, increased 0.1% in March after an unrevised 0.3% February decline. It was the leaders' first increase in six months. During the last ten years there [...]

U.S. Leading Economic Indicators Up Slightly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080417i.jpg" align="left" border="0" height="265" width="353">
Japan's February industrial production was revised up sharply
using a new data formula. Production is now in line with Japan&#8217;s strong
exports, solving one of the puzzles about the economy for the Bank of
Japan. Industrial production
rose 1.6% in February from January, revised up significantly in a
turnaround from the initial estimate of a 1.2% fall that was reported
last month. The revision was due mainly to a change in data calculation
methods rather than to revised data themselves. From a year earlier,
February production rose 5.1% after gaining 2.2% in January. Still, for
manufacturing sequential growth rates do not paint a clear picture. The
revision has elevated the three-month growth rates to strong levels.
But, even with the new readings, over six months there is a lull in
growth compared to the 12-month pace. This finding is across the board
in manufacturing; utilities output has a stronger more consistent
trend. It is thus too soon to say that the revival discovered though
data revision is what it seems. Several more months of data should help
to clarify the nature of the trend.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> Japan Industrial Production Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/m %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr>
<td class="firstcol">seasonally adjusted</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Mining &amp; Manufacturing</td>
<td>1.6%</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>6.8%</td>
<td>0.9%</td>
<td>4.0%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">Total Industry</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>8.4%</td>
<td>1.6%</td>
<td>4.4%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>1.6%</td>
<td>-0.6%</td>
<td>0.7%</td>
<td>6.8%</td>
<td>0.9%</td>
<td>4.0%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">Textiles</td>
<td>-0.2%</td>
<td>-2.3%</td>
<td>1.6%</td>
<td>-4.0%</td>
<td>-6.3%</td>
<td>-6.0%</td>
<td>-3.6%</td>
</tr>
<tr>
<td class="firstcol">Transport Eqpt</td>
<td>1.3%</td>
<td>1.8%</td>
<td>1.3%</td>
<td>18.9%</td>
<td>5.4%</td>
<td>11.4%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td colspan="8">Product Group</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>2.7%</td>
<td>0.2%</td>
<td>0.9%</td>
<td>16.4%</td>
<td>1.8%</td>
<td>6.9%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>1.0%</td>
<td>-1.9%</td>
<td>1.1%</td>
<td>0.7%</td>
<td>2.0%</td>
<td>4.0%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">Investment Goods</td>
<td>1.1%</td>
<td>0.5%</td>
<td>0.0%</td>
<td>6.4%</td>
<td>-2.6%</td>
<td>-0.5%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">Mining</td>
<td>2.3%</td>
<td>-6.7%</td>
<td>-1.6%</td>
<td>-22.0%</td>
<td>-5.7%</td>
<td>-4.5%</td>
<td>4.8%</td>
</tr>
<tr>
<td class="firstcol">Electricity &amp; Gas</td>
<td>9.7%</td>
<td>0.1%</td>
<td>-1.2%</td>
<td>38.7%</td>
<td>17.4%</td>
<td>17.5%</td>
<td>-1.4%</td>
</tr>
</tbody>
</table>
</body></html>

Japan's February industrial production was revised up sharply using a new data formula. Production is now in line with Japan’s strong exports, solving one of the puzzles about the economy for the Bank of Japan. Industrial production [...]

Japan's IP is Revised Sharply Higher: Still Growth Trends are Mixed

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080417h.jpg" align="left" border="0" height="265" width="353">
The Euro Area is not going to make it easy for us to
understand it. After two months of deficits, the trade surplus is back.
Imports fell across the board in February paving the way for the trade
improvement. Both export and import flows have accelerated in recent
months. But the year/year import picture is showing some softening.
Meanwhile, exports, after looking for all the world like the strong
euro value was getting to them toward the end of 2007, have rebounded
sharply and put in two strong months of growth. Export growth exceeds
import growth again in February (Yr/Yr) for the fist time since early
in 2007.
These trends create a quandary about growth. The main research
houses in Germany have cut German and EMU growth estimates for this
year. But how much of this is financial uncertainty at work, and how
much is due to the strong exchange rate? The institutes expect EMU
exports to slow in 2008 and to slow further in 2009. Meanwhile, import
volume is expected to slow slightly as well in 2008 and in 2009. The
picture is still one of an expanding surplus because even though
exports are projected to slow over the period they are continuing to
outpace imports early in 2008 and will only lose out by small growth
differentials in 2008 for the year as a whole and not enough to
overwhelm the fact that exports already exceed imports. Exports will,
however, slip relative to imports again in 2009, bringing a small
deficit. While the strong euro seems to be having some impact it is not
enough to bring persisting deficits to the e-Zone trade account until
2009. It makes you wonder how much pain the current euro exchange rate
is causing and if it is proportional to the noise that is being made
about it? The euro seems
high. The trade weighted real euro exchange rate is extremely high. And
Europe is quite trade-dependent. So why is the euro&#8217;s strength having
such a small impact on trade? That remains a conundrum. The Euro
reached a record high Vs the dollar and real trade-weighted high in
late 2007 yet even by end 2009 the impact on trade is expected to be
muted.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro
Area-Trade Trends for Goods </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; 2,103</td>
<td>&#8364;&#8364; (1,048)</td>
<td>&#8364;&#8364; (178)</td>
<td>&#8364;&#8364; 876</td>
<td>&#8364;&#8364; 1,888</td>
<td>&#8364;&#8364; (569)</td>
</tr>
<tr>
<td class="firstcol"> Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Exp</td>
<td>2.0%</td>
<td>6.8%</td>
<td>23.5%</td>
<td>10.4%</td>
<td>10.0%</td>
<td>11.4%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td> -1.7%</td>
<td>3.4%</td>
<td> -2.5%</td>
<td> -0.5%</td>
<td>5.4%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>1.0%</td>
<td>6.4%</td>
<td>28.3%</td>
<td>12.0%</td>
<td>13.2%</td>
<td>5.2%</td>
</tr>
<tr>
<td class="firstcol">Other</td>
<td>2.2%</td>
<td>7.0%</td>
<td>25.2%</td>
<td>11.1%</td>
<td>10.3%</td>
<td>11.5%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.3%</td>
<td>6.6%</td>
<td>7.9%</td>
<td>1.6%</td>
<td>6.6%</td>
<td>10.1%</td>
</tr>
<tr>
<td class="firstcol"> IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All IMP</td>
<td> -0.4%</td>
<td>6.3%</td>
<td>21.1%</td>
<td>11.4%</td>
<td>9.0%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td> -2.1%</td>
<td>2.8%</td>
<td> -4.4%</td>
<td>7.1%</td>
<td>9.1%</td>
<td>11.4%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td> -1.3%</td>
<td>1.5%</td>
<td>5.0%</td>
<td> -4.7%</td>
<td> -1.1%</td>
<td>24.5%</td>
</tr>
<tr>
<td class="firstcol">Other</td>
<td> -0.3%</td>
<td>6.8%</td>
<td>23.8%</td>
<td>12.6%</td>
<td>9.5%</td>
<td>7.3%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td> -2.8%</td>
<td>4.6%</td>
<td> -1.5%</td>
<td> -8.6%</td>
<td> -2.5%</td>
<td>12.8%</td>
</tr>
<tr class="odd">
<td colspan="5" class="firstcol">*Millions of Euros; mo or period
average</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The Euro Area is not going to make it easy for us to understand it. After two months of deficits, the trade surplus is back. Imports fell across the board in February paving the way for the trade improvement. Both export and import [...]

EMU Trade Deficit Shoots Back Into Surplus

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080417e.jpg" width="353">
The 1Q &#39;08 Composite Business Index published by the Manufacturers&#39; Alliance/MAPI fell to 57 from 64 in 4Q &#39;07. The latest reading was the lowest since 4Q &#39;06.
During the last ten years there has been a 69% correlation between the Composite Index Level and quarterly growth in US factory sector output.
The current orders index fell sharply to the lowest since 2003. The 1Q export orders index also fell moderately to its lowest level since mid-2005. During the last ten years there has been a 59% correlation between the export orders index and quarterly growth in real US exports.
The profit margins index also fell to its lowest level since 3Q &#39;05.Capital spending intentions for the coming year were down to the lowest level since 2006. During the last ten years there has been a 75% correlation between the capital spending index and q/q growth in business investment.
The survey of 60 senior financial executives representing a broad range of manufacturing industries reflects the views on current &amp; future business conditions. The business outlook index is a weighted sum of shipments, backlogs, inventories, and profit margin indexes.
For the latest US Business Outlook from the MAPI click <a href="http://www.mapi.net/am/Template.cfm?Section=Newsroom&amp;template=/CM/ContentDisplay.cfm&amp;ContentID=5511">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/surveys/@SE/@SE.HTM">Manufacturers&#39; Alliance/MAPI Survey</a></th>
<th scope="col">1Q &#39;08</th>
<th scope="col">4Q &#39;07</th>
<th scope="col">1Q &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Business Index</td>
<td>57</td>
<td>64</td>
<td>58</td>
<td>63</td>
<td>66</td>
<td>70</td>
</tr>
</tbody>
</table>
</body>
</html>

The 1Q '08 Composite Business Index published by the Manufacturers' Alliance/MAPI fell to 57 from 64 in 4Q '07. The latest reading was the lowest since 4Q '06. During the last ten years there has been a 69% correlation between the [...]

MAPI Business Outlook Survey Fell Again

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.

250501Z6.jpg

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), after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

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

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

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

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

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

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

U.S. Light Vehicle Sales Fall in April

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

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

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

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

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

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

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

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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

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

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

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

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

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

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

Carol Stone, CBE

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

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

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

Economic conditions vary widely across states and territories.  In the week ended April 12, the highest unemployment rates were in New Jersey (2.39%), California (2.24%), Washington (2.19%), Rhode Island (2.17%) and Massachusetts (1.93%).  The lowest rates were in Florida (0.35%), South Dakota (0.40%), Alabama (0.41%), Virginia (0.45%) and Tennessee (0.48%).  Rates in other notable states include the Illinois (1.85%), New York (1.71%), Pennsylvania (1.54%) and Texas (1.09%). These state data are not seasonally adjusted.

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

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- Actual initial claims amount is 16,000 more than forecast.
- Total beneficiaries rose by 83,000.
- Insured unemployment rate ticked up to 1.3% after 15 months at 1.2%.

Economy in Brief: April 2008

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