Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517e.jpg" width="353">
The May National Association of Home Builders&#39; (NAHB) Composite Housing Market Index recovered all of the prior month&#39;s sharp drop and rose to 70.
During the last twenty years, annual changes in the composite index had an 83% correlation with the change in new home sales. There&#39;s been an 86% correlation with the change in single family housing starts.
All of the index components improved in May though the index of expected sales in six months by just 1.3%.
Traffic of prospective home buyers rose to the highest level this year.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the <a href="http://www.nahb.org"> National Association of Home Builders</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a> </th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>70</td>
<td>67</td>
<td>69</td>
<td>68</td>
<td>64</td>
<td>61</td>
</tr>
</tbody>
</table>
</body>
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The May National Association of Home Builders' (NAHB) Composite Housing Market Index recovered all of the prior month's sharp drop and rose to 70. During the last twenty years, annual changes in the composite index had an 83% [...]

NAHB Housing Market Index Recovered

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517a.jpg" width="353">
Housing starts rebounded 11.0% in April and recovered about half of the prior month&#39;s unrevised 17.6% decline.The rise to 2.038M exceeded Consensus expectations for 1.97M starts. Figures were revised back to 2003.
Single-family starts gained back just a piece of the prior month&#39;s sharp decline with a 6.3% m/m rise. All of the rise was due to a 21.1% (11.4% y/y) increase in the South while single family starts in the Northeast dropped for the third month this year (-12.9% y/y). Single family starts in the Midwest fell 7.6% (-19.1% y/y) and starts in the West were off 4.7% but still up 1.0% y/y.
Multi family starts gained back most of the prior moth&#39;s skid with a 35.2% rise.
Building permits rose 5.3%. This first increase in three months was nearly back to the record high.

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<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">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,038</td>
<td>1,836</td>
<td>3.6%</td>
<td>1,950</td>
<td>1,854</td>
<td>1,7 10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,635</td>
<td>1,538</td>
<td>0.7%</td>
<td>1,604</td>
<td>1,505</td>
<td>1,363</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>403</td>
<td>298</td>
<td>17.3%</td>
<td>345</td>
<td>349</td>
<td>347</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,129</td>
<td>2,021</td>
<td>2.9%</td>
<td>2,058</td>
<td>1,8 88</td>
<td>1,749</td>
</tr>
</tbody>
</table>
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Housing starts rebounded 11.0% in April and recovered about half of the prior month's unrevised 17.6% decline.The rise to 2.038M exceeded Consensus expectations for 1.97M starts. Figures were revised back to 2003. Single-family starts [...]

Housing Starts Rebounded

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517b.jpg" width="353">
The Producer Price Index for finished goods rose 0.6% last month and again surpassed Consensus expectations which had been for a 0.4% increase. Excluding food &amp; energy the PPI rose 0.3% in April, up sharply from the 0.1% gains during the prior two month&#39;s and also beat Consensus expectations for a 0.2% increase.
Prices for finished consumer goods less food &amp; energy rose 0.2% (2.6% y/y), up from a 0.1% increase in March. Consumer durable goods prices increased 0.3% (1.9% y/y) following two months of decline as household appliance prices rose (2.0% y/y) along with furniture prices (3.8% y/y).
Capital goods prices increased for the second month (2.8% y/y) though computer prices continued to fall (-18.7% y/y) as did prices for light trucks (-0.5% y/y).
Finished energy prices jumped for the third consecutive month. The 2.1% (15.7% y/y) increase was led by higher prices for gasoline (28.9% y/y) and fuel oil (51.1% y/y). Finished food prices ticked up 0.1% (2.5% y/y) last month.
Intermediate goods prices again were strong, posting a 0.8% advance which reflected a 3.4% (18.8% y/y) spike in energy prices but the 0.2% monthly increase in core intermediate prices was the most moderate since 2003.
Crude prices surged another 2.7% again on the strength of energy prices, up 7.2% (32.6% y/y). The 0.8% gain in core crude prices was the second month of strength and reflected a 17.1% y/y gain in copper scrap, an 8.3% y/y increase in aluminum scrap and a 4.3% y/y rise in iron &amp; steel scrap. During the last thirty years &quot;core&quot; crude prices have been a fair indicator of industrial sector activity with a 48% correlation between the six month change in core crude prices and the change in factory sector industrial production.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.6%</td>
<td>0.7%</td>
<td>4.8%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>-1.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>1.5%</td>
<td>0.2%</td>
<td>0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.8%</td>
<td>1.0%</td>
<td>8.2%</td>
<td>6.6%</td>
<td>4.6%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.3%</td>
<td>6.6%</td>
<td>5.7%</td>
<td>2.0%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.7%</td>
<td>4.3%</td>
<td>11.8%</td>
<td>17.5%</td>
<td>25.1%</td>
<td>-10.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.8%</td>
<td>1.0%</td>
<td>8.4%</td>
<td>26.6%</td>
<td>12.4%</td>
<td>3.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Producer Price Index for finished goods rose 0.6% last month and again surpassed Consensus expectations which had been for a 0.4% increase. Excluding food & energy the PPI rose 0.3% in April, up sharply from the 0.1% gains during [...]

PPI Gains Broad

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517b.jpg" width="353">
The Producer Price Index for finished goods rose 0.6% last month and again surpassed Consensus expectations which had been for a 0.4% increase. Excluding food &amp; energy the PPI rose 0.3% in April, up sharply from the 0.1% gains during the prior two month&#39;s and also beat Consensus expectations for a 0.2% increase.
Prices for finished consumer goods less food &amp; energy rose 0.2% (2.6% y/y), up from a 0.1% increase in March. Consumer durable goods prices increased 0.3% (1.9% y/y) following two months of decline as household appliance prices rose (2.0% y/y) along with furniture prices (3.8% y/y).
Capital goods prices increased for the second month (2.8% y/y) though computer prices continued to fall (-18.7% y/y) as did prices for light trucks (-0.5% y/y).
Finished energy prices jumped for the third consecutive month. The 2.1% (15.7% y/y) increase was led by higher prices for gasoline (28.9% y/y) and fuel oil (51.1% y/y). Finished food prices ticked up 0.1% (2.5% y/y) last month.
Intermediate goods prices again were strong, posting a 0.8% advance which reflected a 3.4% (18.8% y/y) spike in energy prices but the 0.2% monthly increase in core intermediate prices was the most moderate since 2003.
Crude prices surged another 2.7% again on the strength of energy prices, up 7.2% (32.6% y/y). The 0.8% gain in core crude prices was the second month of strength and reflected a 17.1% y/y gain in copper scrap, an 8.3% y/y increase in aluminum scrap and a 4.3% y/y rise in iron &amp; steel scrap. During the last thirty years &quot;core&quot; crude prices have been a fair indicator of industrial sector activity with a 48% correlation between the six month change in core crude prices and the change in factory sector industrial production.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.6%</td>
<td>0.7%</td>
<td>4.8%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>-1.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>1.5%</td>
<td>0.2%</td>
<td>0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.8%</td>
<td>1.0%</td>
<td>8.2%</td>
<td>6.6%</td>
<td>4.6%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.3%</td>
<td>6.6%</td>
<td>5.7%</td>
<td>2.0%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.7%</td>
<td>4.3%</td>
<td>11.8%</td>
<td>17.5%</td>
<td>25.1%</td>
<td>-10.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.8%</td>
<td>1.0%</td>
<td>8.4%</td>
<td>26.6%</td>
<td>12.4%</td>
<td>3.8%</td>
</tr>
</tbody>
</table>
Housing Starts Rebounded 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517a.jpg" width="353">
Housing starts rebounded 11.0% in April and recovered about half of the prior month&#39;s unrevised 17.6% decline.The rise to 2.038M exceeded Consensus expectations for 1.97M starts. Figures were revised back to 2003.
Single-family starts gained back just a piece of the prior month&#39;s sharp decline with a 6.3% m/m rise. All of the rise was due to a 21.1% (11.4% y/y) increase in the South while single family starts in the Northeast dropped for the third month this year (-12.9% y/y). Single family starts in the Midwest fell 7.6% (-19.1% y/y) and starts in the West were off 4.7% but still up 1.0% y/y.
Multi family starts gained back most of the prior moth&#39;s skid with a 35.2% rise.
Building permits rose 5.3%. This first increase in three months was nearly back to the record high.

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</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">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,038</td>
<td>1,836</td>
<td>3.6%</td>
<td>1,950</td>
<td>1,854</td>
<td>1,7 10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,635</td>
<td>1,538</td>
<td>0.7%</td>
<td>1,604</td>
<td>1,505</td>
<td>1,363</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>403</td>
<td>298</td>
<td>17.3%</td>
<td>345</td>
<td>349</td>
<td>347</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,129</td>
<td>2,021</td>
<td>2.9%</td>
<td>2,058</td>
<td>1,8 88</td>
<td>1,749</td>
</tr>
</tbody>
</table>
NAHB Housing Market Index Recovered 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517e.jpg" width="353">
The May National Association of Home Builders&#39; (NAHB) Composite Housing Market Index recovered all of the prior month&#39;s sharp drop and rose to 70.
During the last twenty years, annual changes in the composite index had an 83% correlation with the change in new home sales. There&#39;s been an 86% correlation with the change in single family housing starts.
All of the index components improved in May though the index of expected sales in six months by just 1.3%.
Traffic of prospective home buyers rose to the highest level this year.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the <a href="http://www.nahb.org"> National Association of Home Builders</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/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a> </th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>70</td>
<td>67</td>
<td>69</td>
<td>68</td>
<td>64</td>
<td>61</td>
</tr>
</tbody>
</table>
Industrial Production Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517f.jpg" width="353">
Industrial production fell 0.2% in April following a downwardly revised 0.1% increase in March. Consensus expectations had been for a 0.2% gain. Lower utility output accounted for all of the decline as it fell 2.3% (0.7% y/y) for the third decline this year.
Factory sector output recovered 0.1% (3.5% y/y) of a downwardly revised 0.3% decline in March. Excluding the high tech sector where output rose 1.8% (20.3% y/y) factory output fell for the second month, down 0.1% (+2.5% y/y). During 2004 factory output less high tech rose 3.9%.
Production of electrical equipment, appliances &amp; components rose 0.2% after a downwardly revised 1.0% March increase, but the y/y gain of 2.0% was well off the 6.2% pace of 2004. Machinery output also rose a firm 1.3% but here as well the y/y growth of 6.3% is about last year&#39;s increase.
Total capacity utilization slipped to 79.2% and capacity grew 1.2% y/y. Factory sector utilization also slipped to 77.9% and capacity rose 1.3% y/y.

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<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/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>3.1%</td>
<td>4.1%</td>
<td>-0.0%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>-0.9%</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>2.7%</td>
<td>0.3%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Business Equipment</td>
<td>0.8%</td>
<td>-0.1%</td>
<td>8.4%</td>
<td>9.5%</td>
<td>1.2%</td>
<td>-7.9%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>79.2%</td>
<td>79.4%</td>
<td>77.7% (04/04)</td>
<td>78.1%</td>
<td>75.5%</td>
<td>75.3%</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517g.jpg" width="353">
Chain store sales fell a sharp 1.0% last week following the 0.7% surge which opened the month of May, according to the International Council of Shopping Centers (ICSC)-UBS survey. Sales in May nevertheless remained 0.9% above the April average which rose 0.6% from March.
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC rose 0.4% (-0.1% y/y) in early May and reversed all of the prior week&#39;s decline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">05/14/05</th>
<th scope="col">05/07/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>456.7</td>
<td>461.4</td>
<td>3.3%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
Japan's Real GDP Strong in First Quarter,2005: Deflation Still a Problem 
by <a href="/comment/Curley.html">Louise Curley</a> May 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517h.jpg" width="353">
The first quarter preliminary report for Japan&#39;s Real Gross Domestic Product released today was surprisingly good. GDP increased at annual rate of 5.3%. Last year also started out with a bang--a slightly larger increase, 5.6%-- but this was followed by declines of 0.83% and 1.04% in the second and third quarters and a minimal increase of 0.06% in the fourth quarter.
The composition of this year&#39;s first quarter increase is significantly different from that of last year&#39;s (See table below) and suggests that the outlook may be more promising. Although private inventory accumulation accounted for almost one-third of the increases in both years, there were encouraging shifts from the public to the private sector in the remaining two-thirds of the increase. Household consumption accounted for 49% of the total increase in 2005, up from 27.1% in 2004, while government consumption went from 17.2% to 10.1%. Private gross fixed investment accounted for 8.2% of the increase in the first quarter of 2005 in contrast to a negative impact of 26.6% in 2004, while public gross fixed investment dropped to 5.8% from a 33.3% contribution in 2004.
These increases in the private domestic sector&#39;s contribution to growth were all the more impressive in view of negative impact of the external sector. Net exports of goods and services were a drag on growth in 2005 of almost 6% whereas they contributed 19% to growth in 2004.
While the increase in activity in the private domestic sector is encouraging, deflation remains a stubborn problem. The non seasonally adjusted chain-linked GDP deflator in the first quarter of 2005 was 1.2% below the comparable figure of a year ago. There is, however, some evidence that prices at the wholesale level are beginning to move up and may eventually lead to price rises at the consumer level. Japan&#39;s Corporate Goods Price Index released yesterday, showed a year to year increase of 3.3% in April. The index has shown increases since May of 2004, the first sustained rise since the late nineties. The attached chart shows the year-to-year changes in this index together with the year-to-year changes in the chain linked GDP deflator.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Fourth to First Quarter Change&nbsp;</th>
<th scope="col">2005 Bil. Yen</th>
<th scope="col">2004 Bil. Yen</th>
<th scope="col">2005 %</th>
<th scope="col">2004 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Household Consumption</td>
<td>3416.0</td>
<td>1958.2</td>
<td>49.2</td>
<td>27.1</td>
</tr>
<tr>
<td class="firstcol">Government Consumption</td>
<td>699.9</td>
<td>1250.5</td>
<td>10.1</td>
<td>17.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Private Gross Fixed Invest.</td>
<td>51.2</td>
<td>-1.957.7</td>
<td>8.2</td>
<td>-26.6</td>
</tr>
<tr>
<td class="firstcol">Public Gross Fixed Invest.</td>
<td>404.8</td>
<td>2432.1</td>
<td>5.8</td>
<td>33.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Private Inventory Change</td>
<td>2312.0</td>
<td>2207.6</td>
<td>33.3</td>
<td>30.4</td>
</tr>
<tr>
<td class="firstcol">Public Inventory Change</td>
<td>-48.9</td>
<td>68.4</td>
<td>-0.7</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Exports of Goods and Services</td>
<td>-412.4</td>
<td>1389.0</td>
<td>-5.9</td>
<td>19.1</td>
</tr>
<tr>
<td class="firstcol">Total of Items Listed*</td>
<td>6942.6</td>
<td>7348.1</td>
<td>100.0</td>
<td>100.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Change in GDP</td>
<td>6950.2</td>
<td>7267.6</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517d.jpg" width="353">
China&#39;s balance of trade, which had risen sharply during 2004 and into January of this year, has begun to moderate. The April balance was $7,259 million compared to $7,974 in March and the peak of $11,443 reached in January. China&#39;s balance of trade in goods is shown in the first chart. Trade balances among countries are not yet available for April. Changes from February to March are shown in the following table. During the month of March, China&#39;s balance of trade with the U. S., Japan, Korea and Taiwan improved but deteriorated with the Euro Area it deteriorated.
In spite of the rise in the balance of trade in 2004, the largest yearly balance of trade was reached back in 1998. At that time the balance was $43,476 million compared with $32,868 in 2004. The direction of trade has changed markedly since then. The table below lists the balances of trade with selected areas and countries and the changes between 1998 and 2004. By far the largest change has taken place in the China-US trade, where China&#39;s surplus in the balance of trade has increased by $59,358 million from $20,968 million in 1998 to $80,321 million in 2004. The second chart compares China&#39;s total balance of trade with that for the United States. Over this period, China also improved its surplus with Europe from $7,085 million to $33, 648 million. Offsetting the increases in surpluses with the U. S. and Europe were the increases in deficits with Asian countries and Latin America. (Note: Data for Latin America were taken from the IMFDOT data base, which has much more country detail than the China data base in EMERGEPR)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517c.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGEPR/@P1/@P1.HTM">China</a> Millions of US$</th>
<th scope="col">Apr 05</th>
<th scope="col">Mar 05</th>
<th scope="col">Feb&nbsp; 05</th>
<th scope="col">M/M chg</th>
<th scope="col">2004- 1998</th>
<th scope="col">2004</th>
<th scope="col">&nbsp;2003&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2002</th>
<th scope="col">&nbsp;1998</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Trade Balance</td>
<td>7259</td>
<td>7974</td>
<td>4877</td>
<td>2097</td>
<td>-10608</td>
<td>32868</td>
<td>25558</td>
<td>30426</td>
<td>43476</td>
</tr>
<tr>
<td class="firstcol">Balance with U. S.</td>
<td></td>
<td>9228</td>
<td>8363</td>
<td>865</td>
<td>59358</td>
<td>80321</td>
<td>58627</td>
<td>42732</td>
<td>20968</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance with Europe</td>
<td>&nbsp;</td>
<td>4353</td>
<td>5485</td>
<td>-1131</td>
<td>26563</td>
<td>33648</td>
<td>18461</td>
<td>5770</td>
<td>7085</td>
</tr>
<tr>
<td class="firstcol">Balance with Japan</td>
<td>&nbsp;</td>
<td>-882</td>
<td>-1547</td>
<td>665</td>
<td>-21966</td>
<td>-20655</td>
<td>-14750</td>
<td>-5006</td>
<td>1311</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance with Korea</td>
<td>&nbsp;</td>
<td>-3081</td>
<td>-3780</td>
<td>699</td>
<td>-24941</td>
<td>-34356</td>
<td>-23056</td>
<td>-13073</td>
<td>-9415</td>
</tr>
<tr>
<td class="firstcol">Balance with Taiwan</td>
<td>&nbsp;</td>
<td>-4321</td>
<td>-4690</td>
<td>369</td>
<td>-38385</td>
<td>-51212</td>
<td>-31493</td>
<td>-22338</td>
<td>-12827</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance with Latin America</td>
<td>n.a.</td>
<td>n.a.</td>
<td>n.a.</td>
<td>n.a.</td>
<td>-6879</td>
<td>-4615</td>
<td>-3218</td>
<td>928</td>
<td>2264</td>
</tr>
</tbody>
</table>
</body>
</html>

China's balance of trade, which had risen sharply during 2004 and into January of this year, has begun to moderate. The April balance was $7,259 million compared to $7,974 in March and the peak of $11,443 reached in January. China's [...]

China' Trade in Goods: Changes in Direction

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050516a.jpg" width="353">
The Empire State Index of General Business Conditions in New York&#39;s manufacturing industries went negative in May for the first month since April 2003. The decline to -11.11 followed a year of weakening versus the peak in February 2004 and April&#39;s level was revised down.
The new orders component dropped further into negative territory but the shipments index was slightly positive. The employment index fell to its lowest since September 2003 and the barely positive reading indicated little if any job growth. Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.
The prices paid index slipped further to the lowest level since last February.
Expectations for business conditions in six months fell further and indicated the most pessimism since 2001. Expectations for future capital spending fell hard for the third month in the last five and the average level this year is below 2004.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html">here</a>.

<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/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a> </th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>-11.11</td>
<td>2.03</td>
<td>31.01</td>
<td>28.76</td>
<td>16.17</td>
<td>7.19</td>
</tr>
</tbody>
</table>
</body>
</html>

The Empire State Index of General Business Conditions in New York's manufacturing industries went negative in May for the first month since April 2003. The decline to -11.11 followed a year of weakening versus the peak in February [...]

Empire State Index Negative

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/050513e.jpg" width="353">
A recurrent theme of our reports over the last couple of months has been the continuation of low consumer price inflation despite high energy prices. This phenomenon has persisted through April in several European countries that reported their latest CPI data today.
This is especially evident in France, where the total CPI has even slowed somewhat in the face of the recent surge in energy costs. The first four months of 2005 averaged year-on-year inflation of 1.8%, compared with a five-year average of 2.0%. Food is cheaper, clothing prices are little changed and manufactured goods have declined outright. Services prices have been rising 2.7%, but this is less than their 3%+ pace in 2002.
In Finland and Sweden, which we mentioned here a month ago, the 12-month change in total CPI ticked up by 0.1% and 0.2%, respectively from their March rates. But that still leaves Finland at 1.1% and Sweden at a mere 0.3%. In Spain, total inflation was 3.5% year-on-year in April, with some signs of upward creep. But the pace excluding energy has been steady at 2.9% for the last two years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513f.jpg" width="353">
Perhaps we are simply short-sighted in these comments; perhaps it simply takes longer than a year for the &quot;second-round&quot; effects of sustained energy prices to filter through to other items. Or perhaps, as we noted elsewhere recently, the second-round effects will appear more as restraints to demand growth than spurs to higher inflation.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/G10.HTM">Yr/Yr % Changes</a> Not Seasonally Adjusted</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>1.8</td>
<td>1.9</td>
<td>1.6</td>
<td>2.1</td>
<td>1.2</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Finland</td>
<td>1.1</td>
<td>1.0</td>
<td>0.2</td>
<td>0.4</td>
<td>0.6</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Sweden</td>
<td>0.3</td>
<td>0.1</td>
<td>0.7</td>
<td>0.3</td>
<td>1.3</td>
<td>2.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>3.5</td>
<td>3.4</td>
<td>3.3</td>
<td>3.2</td>
<td>2.6</td>
<td>4.5</td>
</tr>
<tr>
<td class="firstcol">US</td>
<td>--</td>
<td>3.1</td>
<td>3.0</td>
<td>3.3</td>
<td>1.9</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body>
</html>

A recurrent theme of our reports over the last couple of months has been the continuation of low consumer price inflation despite high energy prices. This phenomenon has persisted through April in several European countries that [...]

European Consumer Inflation Continues Moderate in the Face of Rising Energy

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

250501F20.jpg

250501G20.jpg

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: May 2005

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