Tom Moeller

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WTI crude oil prices jumped to $50.96 per barrel
(38.0% y/y) last week, the highest level since July of last year. Yesterday,
prices strengthened further to $52.83 per barrel. Brent crude oil prices
increased to $53.92 per barrel last week, then rose to $55.35 per barrel
yesterday.
Natural gas prices increased to $3.70/mmbtu last
week, and have nearly doubled y/y. It was the highest level since November 2014.
Prices eased to $3.57 yesterday.
Regular gasoline prices increased to $2.24 per gallon (9.8% y/y) last
week, the highest level since late October. Prices remained down versus a 2014
high of $3.71 per gallon. Haver Analytics constructs factors adjusting for the
seasonal variation in these pump prices. The adjusted price rose last week to
$2.46 per gallon, and prices have firmed substantially since mid-year.
Last week, gasoline demand declined 1.2% y/y, while
demand for all petroleum products fell 1.0% y/y. Gasoline inventories 
rose 5.5% y/y, and inventories of all petroleum products increased 3.5% y/y.
Crude oil input to refineries eased 1.0% y/y in the last four weeks.
The energy price data are reported by the U.S. Department of
Energy. The petroleum demand and inventory figures are from the Oil &amp; Gas
Journal Weekly. These data can be found in Haver's WEEKLY database. The
daily figures are in DAILY and greater detail on prices, demand and
production, along with regional breakdowns, are in OILWKLY.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th scope="col" >12/12/16</th>
 <th scope="col" >12/05/16</th>
 <th scope="col" >11/28/16</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Retail Gasoline ($ per Gallon, Regular)</td>
 <td >2.24</td>
 <td >2.21</td>
 <td >2.15</td>
 <td >9.8</td>
 <td >2.03</td>
 <td >2.30</td>
 <td >3.33</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl.,
 WSJ)</td>
 <td >50.96</td>
 <td >48.63</td>
 <td >47.56</td>
 <td >38.0</td>
 <td >48.90</td>
 <td >93.64</td>
 <td >97.96</td>
 </tr>
 <tr>
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td >3.70</td>
 <td >3.21</td>
 <td >2.76</td>
 <td >90.7</td>
 <td >2.62</td>
 <td >4.37</td>
 <td >3.73</td>
 </tr>
 </tbody>
</table>


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WTI crude oil prices jumped to $50.96 per barrel (38.0% y/y) last week, the highest level since July of last year. Yesterday, prices strengthened further to $52.83 per barrel. Brent crude oil prices increased to $53.92 per barrel last [...]

U.S. Crude Oil & Natural Gas Prices Surge

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Import prices slipped 0.3% during November (-0.1% y/y)
following a 0.4% October increase, revised from 0.5%. A 0.4% decline had been
expected in the Action Economics Forecast Survey. These figures are not
seasonally adjusted.
A 4.7% decline (+2.4% y/y) in petroleum import prices led the
fall in the overall import price index, as it followed a 7.3% jump. Nonpetroleum
import prices were unchanged (-0.2% y/y), and have been for four months. Prices
for non-oil industrial supplies &amp; materials increased 0.3% (0.7% y/y) after
a 0.4% decline. Foods, feeds &amp; beverage costs jumped 1.5% (5.6% y/y) after a
0.7% decline. Motor vehicle &amp; parts prices eased 0.1% (0.0% y/y) after a
0.3% rise. Nonauto consumer goods prices slipped 0.1% (-0.6% y/y), and reversed
the prior month's increase. Capital goods prices declined 0.2% (-1.6% y/y), down
3.9% over the last three years. Capital goods prices excluding computers,
peripherals &amp; semiconductors eased 0.1% (-1.1% y/y) for a second month.
Export prices eased 0.1% (-0.3% y/y) following an unrevised
0.2% gain. A 0.2% decline had been expected.
Agricultural commodity prices increased 0.6% (-1.2% y/y)
following as 0.5% gain. Nonagricultural goods costs eased 0.1% (-0.3% y/y) after
a 0.2% increase. Foods, feeds &amp; beverage prices jumped 0.7% (-1.3% y/y)
following declines in three of the prior four months. Industrial supplies &amp;
materials slipped 0.3% (+0.8% y/y) following two months of strong increase.
Motor vehicle &amp; parts&nbsp; prices remained unchanged (-0.6% y/y) while
nonauto consumer goods prices fell 0.7% (-1.9% y/y), down for the third month in
four. Capital goods prices remained steady for the third straight month (-0.3%
y/y).
The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT database. The
expectations figure from the Action Economics Forecast Survey is in the AS1REPNA
database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>


 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export
 Prices (NSA, %)</a></th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Imports - All Commodities</td>
 <td >-0.3</td>
 <td >0.4</td>
 <td >0.1</td>
 <td >-0.1</td>
 <td >-10.2</td>
 <td >-1.1</td>
 <td >-1.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Petroleum</td>
 <td >-4.7</td>
 <td >7.3</td>
 <td >0.6</td>
 <td >2.4</td>
 <td >-46.0</td>
 <td >-5.6</td>
 <td >-2.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Nonpetroleum</td>
 <td >0.0</td>
 <td >-0.1</td>
 <td >0.0</td>
 <td >-0.2</td>
 <td >-2.8</td>
 <td >0.1</td>
 <td >-0.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Exports - All Commodities</td>
 <td >-0.1</td>
 <td >0.2</td>
 <td >0.3</td>
 <td >-0.3</td>
 <td >-6.3</td>
 <td >-0.5</td>
 <td >-0.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Agricultural</td>
 <td >0.6</td>
 <td >0.5</td>
 <td >-1.1</td>
 <td >-1.2</td>
 <td >-13.3</td>
 <td >-2.7</td>
 <td >1.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Nonagricultural</td>
 <td >-0.1</td>
 <td >0.2</td>
 <td >0.5</td>
 <td >-0.3</td>
 <td >-5.5</td>
 <td >-0.3</td>
 <td >-0.7</td>
 </tr>
 </tbody>
 </table>
 
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Import prices slipped 0.3% during November (-0.1% y/y) following a 0.4% October increase, revised from 0.5%. A 0.4% decline had been expected in the Action Economics Forecast Survey. These figures are not seasonally adjusted. A 4.7% [...]

U.S. Import Prices Ease as Oil Prices Decline

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The National Federation of Independent Business reported that
its Small Business Optimism Index jumped 3.7% during November (4.1% y/y) to
98.4. It was the strongest level of optimism since December 2014.

A strengthened 12% of firms reported they were expecting the economy to
improve, also the most since December 2014. Another area of strength was that 11
percent expected higher real sales in six months, up from one percent in
October. Fifteen percent of firms expected to increase employment, the most
since December of this year.

Also on the labor front, a sharply increased 52% of firms
indicated they had few or no qualified candidates to fill job openings. That was
the most since October 1999. Thirty one of firms indicated they had positions
they were unable to fill right now, up from 9% during all of 2009. Despite
hiring difficulty, a lessened 21% percent of firms were raising worker
compensation. That's down from 25% in October, and below January's 27% high. A
lessened 15% were planning to raise worker compensation, below December's 21% high.

An the price inflation front, an increased 5% of firms were
raising average selling prices, the most since January of last year.
Expectations for pricing also remained strong as 19% planned to raise prices, the
most since December.

A sharply lower nineteen percent of firms indicated that taxes were the
single most important problem, and a lower 18% reported that government
requirements were the largest single problem. A slightly increased 16% felt challenged by
the quality of labor, while just 12% of firms indicated that poor sales were the
largest single problem. Ten percent of firms reported insurance cost &amp;
availability as the largest hurdle, up sharply from a 7% September low. Just 6% reported the cost of labor was
the biggest problem, and a lessened 7 percent reported competition from large
businesses as the largest problem. Inflation as the largest problem was
indicated by a higher 3% percent of respondents, the most in 6 months.

Roughly 24 million small businesses exist in the U.S. and
they create 80% of all new jobs. The typical NFIB member employs 10 people and
reports gross sales of about $500,000 a year. The NFIB figures can be found in
Haver's SURVEYS database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >National Federation of
 Independent Business (SA, Net %)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov'15</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Small Business Optimism Index (1986=100)</td>
 <td >98.4</td>
 <td >94.9</td>
 <td >94.1</td>
 <td >94.5</td>
 <td >96.1</td>
 <td >95.6</td>
 <td >92.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Firms Reporting Now is a Good Time To
 Expand the Business</td>
 <td >11</td>
 <td >9</td>
 <td >7</td>
 <td >12</td>
 <td >11</td>
 <td >10</td>
 <td >7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Firms Expecting Higher Real Sales In Six
 Months</td>
 <td >11</td>
 <td >1</td>
 <td >4</td>
 <td >-1</td>
 <td >8</td>
 <td >11</td>
 <td >4</td>
 </tr>
 <tr>
 <td class="firstcol" >Firms Expecting Economy To Improve</td>
 <td >12</td>
 <td >-7</td>
 <td >0</td>
 <td >-10</td>
 <td >-5</td>
 <td >-5</td>
 <td >-15</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Firms Planning to Increase Employment</td>
 <td >15</td>
 <td >10</td>
 <td >10</td>
 <td >11</td>
 <td >12</td>
 <td >10</td>
 <td >6</td>
 </tr>
 <tr>
 <td class="firstcol" >Firms With Few or No Qualified
 Applicants For Job Openings</td>
 <td >52</td>
 <td >48</td>
 <td >48</td>
 <td >47</td>
 <td >46</td>
 <td >43</td>
 <td >39</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Firms Reporting That Credit Was Harder
 To Get</td>
 <td >4</td>
 <td >4</td>
 <td >5</td>
 <td >4</td>
 <td >4</td>
 <td >6</td>
 <td >6</td>
 </tr>
 <tr>
 <td class="firstcol" >Firms Raising Average Selling Prices</td>
 <td >5</td>
 <td >2</td>
 <td >-1</td>
 <td >4</td>
 <td >2</td>
 <td >8</td>
 <td >2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Firms Raising Worker Compensation</td>
 <td >21</td>
 <td >25</td>
 <td >22</td>
 <td >24</td>
 <td >23</td>
 <td >21</td>
 <td >15</td>
 </tr>
 </tbody>
 </table>
 
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The National Federation of Independent Business reported that its Small Business Optimism Index jumped 3.7% during November (4.1% y/y) to 98.4. It was the strongest level of optimism since December 2014. A strengthened 12% of firms [...]

U.S. Small Business Optimism Nears Two-Year High

Robert Brusca

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Japanese trends remain listless whatever their angle 
New readings today for Japanese orders and core orders as well as for its tertiary index (services) leave key trends in the doldrums. All of the surveys have different ways of assessing the sectors. That makes them hard to compare. Teikoku and economy watchers indices are diffusion measures. The sector indices for industry and services are volume indices on levels of activity. Orders are nominal yen amounts express in yen terms. However, we achieve some degree of 'commonality' by taking each at its own method and presenting in the far right hand column where each topical reading ranks in its historic profile of data. On that method none of the measure is strong and the Teikoku (diffusion) indices have the relative strongest readings but all of those reside below their respective 70th percentiles... more ominously, all of the Teikoku readings are below the 50 mark. Regardless of their "standings", all the Teikoku readings refer to some degree of reduction in economic activity.

Still somewhat different assessments by different methods 
The economy watchers diffusion indices which focus on the services sector show rank standings ranging from the 49th to 64th percentiles all very middle-of-the-pack readings. By comparison the Teikoku service sector reading is stronger; the economy watchers "strongest" index standing is for its outlook or future index. That reading is more comparable to Teikoku as it also has an upper 60th percentile reading. The topical economy watcher's current activity index shows contraction with a level of reading below 50. In terms of growth rates the sector indices show services (tertiary) at a low 32 percentile standing, quite weak although the industry ranking at its 62nd percentile is much closer to the Teikoku manufacturing 69th percentile standing. The Teikoku index assesses manufacturing as declining while the sector index actually has some slight growth year-on-year.

Orders are uniformly weak and dismal 
The orders series is simply unique although it pertains to industry and manufacturing. It shows total orders at an 8.7% standing it terms of the ranking of its year-on-year growth rate (lower historically less than 9% of the time...); the less volatile core orders series elevates to a 29th percentile standing, still quite weak. Japan shows a weaker standing for foreign orders than for domestic orders. That is the impact of its relatively tight ties to China where economic conditions have slowed markedly. 

Little optimism for Japan 
This set of Japanese indicators does not show much that is upbeat either in terms of the levels of the readings or their respective momentum. Despite aggressive stimulus by the BoJ there is little to show for it at all in terms of activity, momentum or the inflation that the BoJ seeks to ignite. The Teikoku and economy watchers diffusion indices have too many of their readings that are below 50 (signaling contraction) to be taken as truly neutral news, although the ranking standings assign a more 'normal' standing to them. This is simply the result of Japan have been so weak for so long. Mild contraction has become normal in this nation where population is contracting. 


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Japanese trends remain listless whatever their angle New readings today for Japanese orders and core orders as well as for its tertiary index (services) leave key trends in the doldrums. All of the surveys have different ways of [...]

Japan Continues to Struggle

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The U.S. Treasury Department reported that during November,
the federal government ran a budget deficit of $136.7 billion. A $125.0 billion
deficit had expected in the Action Economics Forecast Survey. So far in FY'17,
the federal government ran a $180.8 billion budget deficit compared to $201.1
billion in the first two months of FY'16. 
Overall revenues increased 1.3% so far in FY'17 versus FY'16.
Individual income taxes rose 5.2% y/y following a 0.3% rise in all of FY'16.
Social insurance contributions increased 1.6% y/y, down from the FY'16 4.7%
gain, while excise taxes fell 1.6% y/y, less than last year's 3.3% fall.
Corporate income taxes declined by nearly two-thirds y/y following a 12.9% drop.
Government spending declined 2.4% y/y so far in FY'17
compared to 4.5% growth during all of last year. Medicare outlays declined 17.8%
y/y after 8.8% growth in FY'16, and Income Security Program payments fell 11.2%
y/y after a 1.0% rise. National Defense spending also was down by 3.7% y/y,
continuing the weakness of the last several years. To the upside was spending on
Health programs which grew by 5.2% y/y after 6.0% growth in FY'16. Social
Security outlays also rose by 3.3% so far in FY'17, about the same as in FY'16.
Spending on Education, Training, Employment &amp; Social Services declined 18.6%
y/y, while spending on Veterans Benefits &amp; Services fell 21.9% y/y. Interest
payments increased 17.5% in so far in FY'17 following 7.8% growth last year.
Haver's data on Federal Government outlays and receipts are
contained in USECON. Considerable detail is given in the separate GOVFIN
database. The Action Economics Forecast Survey numbers are in the AS1REPNA
database.


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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
	
 <thead>
 <tr>
 <th class="firstcol" scope="col">United States Government
 Finance</th>
 <th scope="col"></th>
 <th scope="col">November</th>
 <th scope="col">FY'16</th>
 <th scope="col">FY'15</th>
 <th scope="col" >FY'14</th>
 <th scope="col" >FY'13</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol">Budget Balance</td>
 <td>--</td>
 <td>$-136.7 bil.</td>
 <td>$-587.4 bil.</td>
 <td>$-438.9 bil.</td>
 <td >$-483.4 bil.</td>
 <td >$-680.2 bil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;As a percent of GDP</td>
 <td>--</td>
 <td></td>
 <td>3.2%</td>
 <td>2.5%</td>
 <td >2.8%</td>
 <td >4.1%</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol"></td>
 <td>% of Total</td>
 <td></td>
 <td></td>
 <td></td>
 <td ></td>
 <td ></td>
 </tr>
 <tr>
 <td class="firstcol">Net Revenues (Fiscal Year 2017, Y/Y %
 Change)</td>
 <td>100</td>
 <td>1.3%</td>
 <td>0.6%</td>
 <td>7.6%</td>
 <td >8.9%</td>
 <td >13.3%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Individual Income Taxes</td>
 <td>47</td>
 <td>5.2</td>
 <td>0.3</td>
 <td>10.5</td>
 <td >5.9</td>
 <td >16.3</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;&nbsp;Corporate Income Taxes</td>
 <td>9</td>
 <td>-63.2</td>
 <td>-12.9</td>
 <td>7.2</td>
 <td >17.3</td>
 <td >12.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Social Insurance Taxes</td>
 <td>34</td>
 <td>1.6</td>
 <td>4.7</td>
 <td>4.1</td>
 <td >8.0</td>
 <td >12.1</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Excise Taxes</td>
 <td>3</td>
 <td>-1.6</td>
 <td>-3.3</td>
 <td>5.3</td>
 <td >11.1</td>
 <td >6.3</td>
 </tr>
 <tr>
 <td class="firstcol"></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td ></td>
 <td ></td>
 </tr>
 <tr>
 <td class="firstcol">Net Outlays&nbsp; (Fiscal year 2017, Y/Y
 % Change)</td>
 <td>100</td>
 <td>-2.4</td>
 <td>4.5</td>
 <td>5.3</td>
 <td >1.4</td>
 <td >-2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;National Defense</td>
 <td>15</td>
 <td>-3.7</td>
 <td>0.7</td>
 <td>-2.3</td>
 <td >-4.7</td>
 <td >-6.3</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;&nbsp;Health</td>
 <td>13</td>
 <td>5.2</td>
 <td>6.0</td>
 <td>17.8</td>
 <td >14.3</td>
 <td >3.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Medicare</td>
 <td>15</td>
 <td>-17.8</td>
 <td>8.8</td>
 <td>6.7</td>
 <td >2.8</td>
 <td >5.5</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;&nbsp;Income Security</td>
 <td>13</td>
 <td>-11.2</td>
 <td>1.0</td>
 <td>-0.9</td>
 <td >-4.3</td>
 <td >-1.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Social Security</td>
 <td>24</td>
 <td>3.3</td>
 <td>3.2</td>
 <td>4.4</td>
 <td >4.5</td>
 <td >5.2</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Veterans Benefits &amp; Services</td>
 <td>4</td>
 <td>-21.9</td>
 <td>9.3</td>
 <td>6.8</td>
 <td >7.7</td>
 <td >11.5</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Education, Training, Employment
 &amp; Social Services</td>
 <td>3</td>
 <td>-18.6</td>
 <td>-10.2</td>
 <td>34.7</td>
 <td >25.9</td>
 <td >-21.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Interest</td>
 <td>6</td>
 <td>17.5</td>
 <td>7.8</td>
 <td>-1.8</td>
 <td >2.8</td>
 <td >0.4</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The U.S. Treasury Department reported that during November, the federal government ran a budget deficit of $136.7 billion. A $125.0 billion deficit had expected in the Action Economics Forecast Survey. So far in FY'17, the federal [...]

U.S. Runs a $136.7 billion Budget Deficit in November

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The U.S. Treasury Department reported that during November,
the federal government ran a budget deficit of $136.7 billion. A $125.0 billion
deficit had expected in the Action Economics Forecast Survey. So far in FY'17,
the federal government ran a $180.8 billion budget deficit compared to $201.1
billion in the first two months of FY'16. 
Overall revenues increased 1.3% so far in FY'17 versus FY'16.
Individual income taxes rose 5.2% y/y following a 0.3% rise in all of FY'16.
Social insurance contributions increased 1.6% y/y, down from the FY'16 4.7%
gain, while excise taxes fell 1.6% y/y, less than last year's 3.3% fall.
Corporate income taxes declined by nearly two-thirds y/y following a 12.9% drop.
Government spending declined 2.4% y/y so far in FY'17
compared to 4.5% growth during all of last year. Medicare outlays declined 17.8%
y/y after 8.8% growth in FY'16, and Income Security Program payments fell 11.2%
y/y after a 1.0% rise. National Defense spending also was down by 3.7% y/y,
continuing the weakness of the last several years. To the upside was spending on
Health programs which grew by 5.2% y/y after 6.0% growth in FY'16. Social
Security outlays also rose by 3.3% so far in FY'17, about the same as in FY'16.
Spending on Education, Training, Employment &amp; Social Services declined 18.6%
y/y, while spending on Veterans Benefits &amp; Services fell 21.9% y/y. Interest
payments increased 17.5% in so far in FY'17 following 7.8% growth last year.
Haver's data on Federal Government outlays and receipts are
contained in USECON. Considerable detail is given in the separate GOVFIN
database. The Action Economics Forecast Survey numbers are in the AS1REPNA
database.
<table width="1775" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="736">United States Government
 Finance</th>
 <th scope="col" width="172"></th>
 <th scope="col" width="172">November</th>
 <th scope="col" width="172">FY'16</th>
 <th scope="col" width="172">FY'15</th>
 <th scope="col" width="173">FY'14</th>
 <th scope="col" width="173">FY'13</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="736">Budget Balance</td>
 <td align="center" width="172">--</td>
 <td align="center" width="172">$-136.7 bil.</td>
 <td align="center" width="172">$-587.4 bil.</td>
 <td align="center" width="172">$-438.9 bil.</td>
 <td align="center" width="173">$-483.4 bil.</td>
 <td align="center" width="173">$-680.2 bil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="736">&nbsp;&nbsp;As a percent of GDP</td>
 <td align="center" width="172">--</td>
 <td align="center" width="172"></td>
 <td align="center" width="172">3.2%</td>
 <td align="center" width="172">2.5%</td>
 <td align="center" width="173">2.8%</td>
 <td align="center" width="173">4.1%</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" width="736"></td>
 <td align="center" width="172">% of Total</td>
 <td align="center" width="172"></td>
 <td align="center" width="172"></td>
 <td align="center" width="172"></td>
 <td align="center" width="173"></td>
 <td align="center" width="173"></td>
 </tr>
 <tr>
 <td class="firstcol" width="736">Net Revenues (Fiscal Year 2017, Y/Y %
 Change)</td>
 <td align="center" width="172">100</td>
 <td align="center" width="172">1.3%</td>
 <td align="center" width="172">0.6%</td>
 <td align="center" width="172">7.6%</td>
 <td align="center" width="173">8.9%</td>
 <td align="center" width="173">13.3%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="736">&nbsp;&nbsp;Individual Income Taxes</td>
 <td align="center" width="172">47</td>
 <td align="center" width="172">5.2</td>
 <td align="center" width="172">0.3</td>
 <td align="center" width="172">10.5</td>
 <td align="center" width="173">5.9</td>
 <td align="center" width="173">16.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="736">&nbsp;&nbsp;Corporate Income Taxes</td>
 <td align="center" width="172">9</td>
 <td align="center" width="172">-63.2</td>
 <td align="center" width="172">-12.9</td>
 <td align="center" width="172">7.2</td>
 <td align="center" width="173">17.3</td>
 <td align="center" width="173">12.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="736">&nbsp;&nbsp;Social Insurance Taxes</td>
 <td align="center" width="172">34</td>
 <td align="center" width="172">1.6</td>
 <td align="center" width="172">4.7</td>
 <td align="center" width="172">4.1</td>
 <td align="center" width="173">8.0</td>
 <td align="center" width="173">12.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="736">&nbsp; Excise Taxes</td>
 <td align="center" width="172">3</td>
 <td align="center" width="172">-1.6</td>
 <td align="center" width="172">-3.3</td>
 <td align="center" width="172">5.3</td>
 <td align="center" width="173">11.1</td>
 <td align="center" width="173">6.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="736"></td>
 <td align="center" width="172"></td>
 <td align="center" width="172"></td>
 <td align="center" width="172"></td>
 <td align="center" width="172"></td>
 <td align="center" width="173"></td>
 <td align="center" width="173"></td>
 </tr>
 <tr>
 <td class="firstcol" width="736">Net Outlays&nbsp; (Fiscal year 2017, Y/Y
 % Change)</td>
 <td align="center" width="172">100</td>
 <td align="center" width="172">-2.4</td>
 <td align="center" width="172">4.5</td>
 <td align="center" width="172">5.3</td>
 <td align="center" width="173">1.4</td>
 <td align="center" width="173">-2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="736">&nbsp;&nbsp;National Defense</td>
 <td align="center" width="172">15</td>
 <td align="center" width="172">-3.7</td>
 <td align="center" width="172">0.7</td>
 <td align="center" width="172">-2.3</td>
 <td align="center" width="173">-4.7</td>
 <td align="center" width="173">-6.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="736">&nbsp;&nbsp;Health</td>
 <td align="center" width="172">13</td>
 <td align="center" width="172">5.2</td>
 <td align="center" width="172">6.0</td>
 <td align="center" width="172">17.8</td>
 <td align="center" width="173">14.3</td>
 <td align="center" width="173">3.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="736">&nbsp;&nbsp;Medicare</td>
 <td align="center" width="172">15</td>
 <td align="center" width="172">-17.8</td>
 <td align="center" width="172">8.8</td>
 <td align="center" width="172">6.7</td>
 <td align="center" width="173">2.8</td>
 <td align="center" width="173">5.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="736">&nbsp;&nbsp;Income Security</td>
 <td align="center" width="172">13</td>
 <td align="center" width="172">-11.2</td>
 <td align="center" width="172">1.0</td>
 <td align="center" width="172">-0.9</td>
 <td align="center" width="173">-4.3</td>
 <td align="center" width="173">-1.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="736">&nbsp;&nbsp;Social Security</td>
 <td align="center" width="172">24</td>
 <td align="center" width="172">3.3</td>
 <td align="center" width="172">3.2</td>
 <td align="center" width="172">4.4</td>
 <td align="center" width="173">4.5</td>
 <td align="center" width="173">5.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="736">&nbsp; Veterans Benefits &amp; Services</td>
 <td align="center" width="172">4</td>
 <td align="center" width="172">-21.9</td>
 <td align="center" width="172">9.3</td>
 <td align="center" width="172">6.8</td>
 <td align="center" width="173">7.7</td>
 <td align="center" width="173">11.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="736">&nbsp; Education, Training, Employment
 &amp; Social Services</td>
 <td align="center" width="172">3</td>
 <td align="center" width="172">-18.6</td>
 <td align="center" width="172">-10.2</td>
 <td align="center" width="172">34.7</td>
 <td align="center" width="173">25.9</td>
 <td align="center" width="173">-21.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="736">&nbsp;&nbsp;Interest</td>
 <td align="center" width="172">6</td>
 <td align="center" width="172">17.5</td>
 <td align="center" width="172">7.8</td>
 <td align="center" width="172">-1.8</td>
 <td align="center" width="173">2.8</td>
 <td align="center" width="173">0.4</td>
 </tr>
 </tbody>
</table>


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 <a href="/comment/161209g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161209g.png"></a>

Inventories at the wholesale level fell 0.4% (-0.4% y/y)
during October following an unrevised 0.1% September rise. The advance report
had indicated a 0.6% October decline. Inventories of durable goods declined 0.3%
(-2.2% y/y) after a 0.3% fall. Motor vehicle inventories improved 0.3% (- 1.8%
y/y), while furniture inventories rose 1.6% (3.0% y/y). Computer equipment
stockpiles declined 0.3% (-0.6% y/y) and machinery inventories were off 1.0% (-1.4%
y/y). Inventories of nondurable products fell 0.4% (+2.5% y/y) after a 1.1% jump.
Petroleum inventories strengthened 1.9% (12.2% y/y) with higher prices, but
chemical stockpiles fell 1.1% (-2.0% y/y). Apparel inventories rose 0.3% (-4.4% y/y).

Wholesale sales strengthened 1.4% (2.2% y/y) following a 0.4%
increase. A 0.6% rise was expected in the Action Economics Forecast Survey.
Nondurable goods sales improved 1.6% (1.9% y/y) as petroleum sales surged 6.6% (7.5%
y/y) with higher prices. Chemical sales increased 2.4% (4.5% y/y), but apparel
sales eased 0.1% (-2.9% y/y). Sales of durable goods improved 1.1% (2.5% y/y) as
electrical product sales jumped 2.2% (4.3% y/y), and metals sales surged 2.0%
(-0.9% y/y). Motor vehicle sales improved 0.1% (1.3% y/y), but computer
equipment sales fell 2.3% (-5.8% y/y).

The inventory-to-sales ratio eased to 1.30, and remained
lower than January's 1.37 peak. The durable goods ratio declined to 1.63 and was
down y/y from 1.71.The machinery I/S ratio eased y/y to 2.99, while the motor
vehicles ratio eased y/y to 1.75 from 1.80 last year. The computer industry's
I/S ratio increased y/y to 0.85 from 0.81. In the nondurable goods sector, the
I/S ratio of 1.00 was little changed y/y. The chemical sector's ratio of 1.19
was down sharply y/y. In the petroleum area, the I/S ratio of 0.43
compared to 0.32 two years ago.

The wholesale trade figures are available in Haver's USECON
database. The Action Economic Survey results are contained in AS1REPNA.

<a href="/comment/161209h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161209h.png"></a>
 <a href="/comment/161209i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161209i.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Wholesale Sector - NAICS
 Classification (%)</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td >-0.4</td>
 <td >0.1</td>
 <td >-0.1</td>
 <td >-0.4</td>
 <td >1.8</td>
 <td >6.4</td>
 <td >3.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Sales</td>
 <td >1.4</td>
 <td >0.4</td>
 <td >0.7</td>
 <td >2.2</td>
 <td >-4.3</td>
 <td >3.6</td>
 <td >3.0</td>
 </tr>
 <tr>
 <td class="firstcol" >I/S Ratio</td>
 <td >1.30</td>
 <td >1.32 </td>
 <td >1.33</td>
 <td >1.33 (Oct. '15)</td>
 <td >1.32</td>
 <td >1.21</td>
 <td >1.18</td>
 </tr>
	 </tbody>
	 </table>
	 
	 </body></html>

Inventories at the wholesale level fell 0.4% (-0.4% y/y) during October following an unrevised 0.1% September rise. The advance report had indicated a 0.6% October decline. Inventories of durable goods declined 0.3% (-2.2% y/y) after [...]

U.S. Wholesale Inventories Decline; Sales Increase

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<a href="/comment/161209e_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/161209e.png" align="left"></a>
French manufacturing and overall industrial output fell in October. The French PMI reading has output advancing in October. The chart shows that over broad periods the IP and PMI indices for France move roughly in the same direction (yes, I plot IP as an index, not as a growth rate on this chart). But over short periods, there can be disconnects between the signals of these two reports. This month we have one.

PMI and industrial production: usually two peas in a pod 
The PMI is formally a survey of the breadth of output and other sector conditions rather than an actual reading on the level of output itself. The IP reading for manufacturing is strictly about the level of output. Both the PMI gauge and the IP gauge decelerated from 2011 to late-2012 then picked up, accelerating through late-2015. In early-2016, both indices fell, but now the story is less clear and less consistently told. Manufacturing IP has spiked and dropped while the manufacturing PMI gauge has rising sharply and advanced further. These two tentative IP stories are on a different page for the moment. And it is important to know which is right.

The ECB's unexpected move 
While markets are abuzz over ECB policy, they are largely dismissive of the ECB's latest move to taper policy since ECB head Mario Draghi refuses to call it a taper. But there are events afoot whose signals should not be ignored and in whose context make this decision look more like an actual taper.

The PMI view of the world 
The PMI view of the world has been that the euro area and France have been improving after a long period of lethargy and contraction in manufacturing (see the period averaged manufacturing PMI values in the table). Yet, for IP, contraction is still being experienced in September and in October as well as over six months and 12 months. However, over three months, French output is expanding mostly on the back of a surge in output posted in August. Still, in the fourth-quarter-to-date, French manufacturing output is on the decline again according to the output gauge. The IP view of the world is very different from the PMI view.

To taper or not to taper- is that real question? 
These distinctions are important since France is the second largest economy in the euro area. Its performance will importantly affect macroeconomic measures of the euro area itself. And although Mario Draghi is not calling the ECB action a taper, the ECB is set to reduce its monthly bond purchase amount but to expand the period for making purchases to ultimately inflate its balance sheet by more (not less) in the wake of yesterday's announcement. Still, the bond market acted as though it would be getting less support. The intensity of the monthly purchases is an important aspect of the bond market's support by the ECB and that is now being reduced. So this is why the notion of taper is sort of being obscured because the ECB is doing less (per month) but also doing more (in total). It's a rare opportunity to talk out of both sides of its mouth at once.

The monetary policy plot thickens 
Also yesterday Jens Weidmann, head of the German Central Bank, declared that the ECB must make policy solely based on the rate of inflation. This sounds like Weidmann is throwing down the gauntlet and it is curiously-timed to coincide with the ECB's 'non-taper' and the Bundesbank's own new forecast of elevated growth for Germany in 2016 and 2017. At the same time, the Bank of France has issued a new forecast and does not see things picking up for France until 2018. We all know where the Bundesbank stands on policy and the only 'problem' with Weidmann reminding the ECB of its mandate was the way he and other Germans ignored it and obstructed and delayed the ECB's attempts at stimulus to boost the inflation rate over the past several years when inflation fell and ran markedly below its policy objective for a protracted period. While Draghi assures us that 'everyone is on the same page' in some sense, it appears that agreeable state of affairs is about to break down. The worst situation for the euro area and the ECB would be to have inflation rising and over target with the German economy running hot, the French economy running cold and the Italian political situation hanging in the balance. Yet, with OPEC paring output -and the Saudis just today put customers on notice for supply cutbacks - pressure on headline inflation just might emerge a bit faster than had been expected.

The minefield of shared monetary policy by the ECB 
The ECB does not engage in 'price level targeting.' That means that a period of inflation overshooting is not typically followed by undershooting or vice versa. So Weidmann wants to make it clear that just because the HICP undershot its target for 47 months in a row does not mean that any overshooting will be tolerated on a short-term basis. Weidmann is a good trough uncompromising central banker. And because of those traits, he is a really bad politician and that skill might serve him better here. January 2013 was the last time the ECB essentially hit its inflation target of 2% (the actual target is just under 2%). It has been the better part of four years during which the ECB has not even been even close to achieving it. The current price level in the EMU (as of November 2016) is six percentage points below where it would have been had the ECB achieved a steady state of 2% growth in the HICP from January 2013. You might imagine how with all the austerity and pain suffered by other countries in EMU it will go down if at the first whiff of 2.1% inflation Weidmann wants to bring interest rates higher. While the ECB has no mandate other than achieving its inflation objective (of a bit less than 2%) and while there is no provision for price level targeting, the ECB would seem to have scope to not be on a hair-trigger with policy rates- especially with oil prices as the trigger. Yet, Weidmann clearly does not see it that way. And while is no scope under the ECB charter to talk about anything other than inflation with the German economy doing so well, it will be politically very divisive to be hiking rates in the euro area where inflation is rising modestly because of global oil prices when conditions among members countries are still exhibiting so much slack- except for Germany, of course- especially after four years of such rampant undershooting.

The rocky road ahead (not ice cream) 
It seems to me that this is the reality for which we are headed. That is why the ECB does not want to call this a taper now, but it surely looks like one. And it looks like the time for policymakers to sit around the ECB board table and reach full agreement on what to do is also coming to an end. We can already see previews of how this policy plays out by what is going on at the Fed in the United States. In Europe, the discord will be much greater and much more heated. Welcome to the world of policymaking in 2017. Fasten your seat belts, please. There will be turbulence ahead.



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</html>

French manufacturing and overall industrial output fell in October. The French PMI reading has output advancing in October. The chart shows that over broad periods the IP and PMI indices for France move roughly in the same direction [...]

French IP Provides a Bridge to a Preview of ECB Policymaking in 2017

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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.

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**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.

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**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.

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

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

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

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

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Charts of the Week: Tariff Truce, Tenuous Trust

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

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

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

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

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

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

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

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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

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

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

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

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

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

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

Carol Stone, CBE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Economy in Brief: 2016

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