Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415a.jpg" align="right" border="0" height="265" width="353">
Last month,
the consumer price index published by the Bureau of Labor Statistics
slipped 0.1%. The big news, however, was not the rare negative sign in
front of the monthly figure but the negative sign in front of the
twelve month change. It was the first time since August 1955 that the
figure was negative. (Negative prints a few months ago reflected the
effects of seasonal adjustment factors.) The latest slip in the CPI
contrasts with Consensus expectations for a 0.2% March rise. Leading that decline in prices was a reversal of earlier strength in
energy &amp; food costs. In contrast, "core" pricing recently
picked up a bit. The CPI less food &amp; energy rose 0.2% in each
of the last three months and these increases actually were stronger
than the -0.0% and 0.1% changes during the last four months of 2008.
That pickup was enough to stabilize the twelve month change near 1.8%
after its deceleration from a high of 2.9% back in September of
2006. Lower energy prices in March were
led by a 4.0% decline gasoline prices (-39.3% y/y) which reversed just
half of the February increase. Even weaker last month were fuel oil
prices which fell 7.7%. That was the eighth consecutive monthly drop
and it lowered prices by nearly one-third during the last twelve.
Similarly, prices for natural gas &amp; electricity have fallen in
all but one of the last eight months though they still were 2.6% higher
than last March. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415b.jpg" align="right" border="0" height="265" width="353">
Moderation of earlier gains in food &amp;
beverage prices also has played a role in the overall CPI deceleration.
Prices slipped another 0.1% last month and the annual gain of 4.3% is
down from a peak of 6.1% last fall. Recent weakness has been led by
lower dairy product prices (-3.1% y/y) as prices of other foods
continued higher. Core goods prices have been up
notably in recent months. The second consecutive 0.4% increase in March
reversed all of the weakness since 2006. Higher tobacco prices account
for much of that acceleration as they rose 18.1% year to year. But
there has been some modest firming of prices elsewhere. Prices for
household furnishings &amp; operations show a 1.8% y/y gain
following price deflation early last year. Prices of new &amp; used
motor vehicles also stopped declining during the last three months
though they still are down 0.8% y/y. Apparel prices are up 1.4% y/y
after modest deflation due to the weak Christmas. Gains in core
services prices continue to moderate. The 0.1% upticks
during five of the last six months pulled year-to-year change to 2.3%
which was its lowest since 1983. That moderation continues to owe
mostly to weakness in the housing market which caused March shelter
prices to be unchanged and up just 1.5% y/y. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415c.jpg" align="right" border="0" height="265" width="353">
Owners equivalent rent of
primary residence, a measure not equivalent to other house price
measures, rose 0.2% (2.1% y/y) The cost of travel fell and prices of
lodging away from home have also dropped, by 7.8% during the last year.
Other service prices rose. The increase in medical care services prices
fell back to 0.2% (3.1% y/y) while education costs rose 0.5% (5.6%
y/y).&nbsp; Public transportation prices fell hard as they did
during the prior month. The 1.0% decline was the seventh drop in a row
(-5.0% y/y). The chained CPI, which adjusts for shifts in consumption
patterns, eased to a gain of just 0.2%. The increase in chained prices
less food and energy continued firm at 0.4%. · The consumer price data
is available in Haver's USECON database while
detailed figures can be found in the CPIDATA
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>-0.1</td>
<td>0.4</td>
<td>-0.4</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.4</td>
<td>0.4</td>
<td>0.4</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.1</td>
<td>0.1</td>
<td>2.3</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>-3.0</td>
<td>3.3</td>
<td>-23.1</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>-0.1</td>
<td>-0.1</td>
<td>4.3</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.2</td>
<td>0.6</td>
<td>-0.8 </td>
<td>3.3</td>
<td>2.5</td>
<td>2.9 </td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.4</td>
<td>0.4</td>
<td>1.3</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
</tr>
</tbody>
</table>
</body></html>

Last month, the consumer price index published by the Bureau of Labor Statistics slipped 0.1%. The big news, however, was not the rare negative sign in front of the monthly figure but the negative sign in front of the twelve month [...]

Year-to-Year Drop In U.S. CPI Is First Since '55 Thanks To Energy & Food Prices

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415a.jpg" align="right" border="0" height="265" width="353">Last month,
the consumer price index published by the Bureau of Labor Statistics
slipped 0.1%. The big news, however, was not the rare negative sign in
front of the monthly figure but the negative sign in front of the
twelve month change. It was the first time since August 1955 that the
figure was negative. (Negative prints a few months ago reflected the
effects of seasonal adjustment factors.) The latest slip in the CPI
contrasts with Consensus expectations for a 0.2% March rise.
 Leading that decline in prices was a reversal of earlier
strength in
energy &amp; food costs. In contrast, "core" pricing recently
picked up a bit. The CPI less food &amp; energy rose 0.2% in each
of the last three months and these increases actually were stronger
than the -0.0% and 0.1% changes during the last four months of 2008.
That pickup was enough to stabilize the twelve month change near 1.8%
after its deceleration from a high of 2.9% back in September of
2006.
 Lower energy prices in March were
led by a 4.0% decline gasoline prices (-39.3% y/y) which reversed just
half of the February increase. Even weaker last month were fuel oil
prices which fell 7.7%. That was the eighth consecutive monthly drop
and it lowered prices by nearly one-third during the last twelve.
Similarly, prices for natural gas &amp; electricity have fallen in
all but one of the last eight months though they still were 2.6% higher
than last March.
 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415b.jpg" align="right" border="0" height="265" width="353">Moderation
of earlier gains in food &amp;
beverage prices also has played a role in the overall CPI deceleration.
Prices slipped another 0.1% last month and the annual gain of 4.3% is
down from a peak of 6.1% last fall. Recent weakness has been led by
lower dairy product prices (-3.1% y/y) as prices of other foods
continued higher.
 Core goods prices have been up
notably in recent months. The second consecutive 0.4% increase in March
reversed all of the weakness since 2006. Higher tobacco prices account
for much of that acceleration as they rose 18.1% year to year. But
there has been some modest firming of prices elsewhere. Prices for
household furnishings &amp; operations show a 1.8% y/y gain
following price deflation early last year. Prices of new &amp; used
motor vehicles also stopped declining during the last three months
though they still are down 0.8% y/y. Apparel prices are up 1.4% y/y
after modest deflation due to the weak Christmas. 
 Gains in core
services prices continue to moderate. The 0.1% upticks
during five of the last six months pulled year-to-year change to 2.3%
which was its lowest since 1983. That moderation continues to owe
mostly to weakness in the housing market which caused March shelter
prices to be unchanged and up just 1.5% y/y. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415c.jpg" align="right" border="0" height="265" width="353">
Owners equivalent rent of
primary residence, a measure not equivalent to other house price
measures, rose 0.2% (2.1% y/y) The cost of travel fell and prices of
lodging away from home have also dropped, by 7.8% during the last year.
Other service prices rose. The increase in medical care services prices
fell back to 0.2% (3.1% y/y) while education costs rose 0.5% (5.6%
y/y).&nbsp; Public transportation prices fell hard as they did
during the prior month. The 1.0% decline was the seventh drop in a row
(-5.0% y/y). 
 The chained CPI, which adjusts for shifts in consumption
patterns, eased to a gain of just 0.2%. The increase in chained prices
less food and energy continued firm at 0.4%. · The consumer price data
is available in Haver's USECON database while
detailed figures can be found in the CPIDATA
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>-0.1</td>
<td>0.4</td>
<td>-0.4</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.4</td>
<td>0.4</td>
<td>0.4</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.1</td>
<td>0.1</td>
<td>2.3</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>-3.0</td>
<td>3.3</td>
<td>-23.1</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>-0.1</td>
<td>-0.1</td>
<td>4.3</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.2</td>
<td>0.6</td>
<td>-0.8 </td>
<td>3.3</td>
<td>2.5</td>
<td>2.9 </td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.4</td>
<td>0.4</td>
<td>1.3</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
</tr>
</tbody>
</table>

Japan's Retail Sales Drop 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> April 15, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415d.jpg" align="left" border="0">
Japans economy continues to show the strains it is under as
retail spending fell again in February. The 0.2% drop is a step-up from
the 0.1% drop in January which comes on the heels of December&#8217;s 1.7%
sales collapse. As a result of this sequence of sales results, Japan&#8217;s
retail sales in 2009-Q1 are falling at a 6.6% nominal rate. Nominal
sales are off by only about 2.5% Yr/Yr (seasonally adjusted) since
retail sales in Japan only began falling consistently starting in
October of last year. Over three months sales are off at a 7.8% annual
rate; over six months the decline is at a 5.5% annual rate. 
 

In addition industrial output in Japan fell by 9.4% in
February after a sharper drop of 10.1% in January. These ARE
month-to-month drops in overall industrial output. Japan&#8217;s industrial
sector is being gutted by the sharp contraction in global trade. Japan
remains an economy under a great deal of pressure. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">Japan
Retail Sales Trends</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total SA</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-1.7%</td>
<td>-7.8%</td>
<td>-5.5%</td>
<td>-2.5%</td>
<td>0.0%</td>
<td>-6.6%</td>
</tr>
<tr>
<td colspan="9" class="firstcol">Not
seasonally adjusted</td>
</tr>
<tr class="odd">
<td class="firstcol">Total: Nominal</td>
<td>-1.2%</td>
<td>0.9%</td>
<td>-2.5%</td>
<td>-10.9%</td>
<td>-7.3%</td>
<td>-5.7%</td>
<td>13.0%</td>
<td>-6.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>-6.1%</td>
<td>3.7%</td>
<td>4.3%</td>
<td>6.1%</td>
<td>-7.7%</td>
<td>-5.4%</td>
<td>13.1%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food&amp;
Beverage</td>
<td>-1.5%</td>
<td>-0.5%</td>
<td>-1.4%</td>
<td>-12.9%</td>
<td>-3.1%</td>
<td>-0.6%</td>
<td>8.9%</td>
<td>-9.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Fabric apparel
&amp; access</td>
<td>0.0%</td>
<td>1.7%</td>
<td>-6.3%</td>
<td>-17.6%</td>
<td>-6.9%</td>
<td>-7.2%</td>
<td>8.3%</td>
<td>-5.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Rest of Retail</td>
<td>-0.1%</td>
<td>1.0%</td>
<td>-4.0%</td>
<td>-11.8%</td>
<td>-9.8%</td>
<td>-8.5%</td>
<td>16.2%</td>
<td>-7.5%</td>
</tr>
</tbody>
</table>
U.S. Factory Output Decline Is The
Sharpest Since The Deindustrialization After WWII 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 15, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415e.jpg" align="left" border="0">
In March, the year-to-year decline in U.S. industrial
output of 12.7% was the result of reduced U.S. demand, inventory
cutbacks and recessions abroad. To emphasize the size of that decline,
it was the largest since the factory sector's wind-down following World
War II.
It's the same story as earlier for the U.S. industrial sector.
Output fell 1.5% last month, the same as an unrevised 1.5% drop during
February. For 2008 and 2007, however, production was revised weaker.
Consensus expectations had been for a 0.9% decline in March output.
And the rate of decline has picked up steam. During the last
three months, the rate of decline of 18.5% (AR) about matches the
quickest of the last few months. Factory sector output alone is off at
an 18.7% annual rate during the last three months versus a full-year
drop of 3.2% during 2008.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415f.jpg" align="right" border="0">
The downturn in the housing market continued to lower output
of construction supplies which fell 2.7% last month and at a 30.0%
annual rate during the last three. Output of consumer goods overall
fell 0.4% last month and at a 12.5% rate since so far this year.
Production of autos fell at a 37.3% rate while furniture output fell at
a 21.9% rate so far this year after the 10.5% drop during all of 2008.
Apparel output actually posted a modest March increase but it's off at
a 16.5% rate so far in 2009. Production of business equipment continued
lower last month by 2.4% and at a 27.6% rate for the year.
Pain has come to an area which previously was immune.
Industrial production in the high-tech sector fell another 3.1% last
month and at a 23.8% rate during the last three. That follows a
downwardly revised 11.4% increase during all of last year. Less high
tech, overall industrial production fell 1.5% during March and the
annual rate of change of -18.5% was near the weakest since 1975.
Outside of the both the auto and the high tech sectors, total
factory production fell 1.5% last month and the three-month annual rate
of decline remained more than firm at -16.8%.
Excess capacity grew even further last month. Capacity
utilization fell to 69.3%, a record low for the series which dates to
1966. Utilization in the factory sector dropped even harder
to 65.8% from a peak near 80% back in 2007. The latest rate was a
record low since WW II. Growth in the total productive
capacity of the factory sector has slowed to 0.5% (y/y) and the growth
during the last two years was revised down.
The industrial production data are available in Haver's USECON
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">INDUSTRIAL
PRODUCTION (SA, %)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Output </td>
<td>-1.5</td>
<td>-1.5</td>
<td>-12.7</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-1.7</td>
<td>-0.6</td>
<td>-15.0</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Consumer Goods</td>
<td>-0.4</td>
<td>-0.7</td>
<td>-7.8</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Business Equipment</td>
<td>-2.4</td>
<td>-1.5</td>
<td>-14.4</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Construction Supplies</td>
<td>-2.7</td>
<td>-2.0</td>
<td>-21.0</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>1.9</td>
<td>-7.8</td>
<td>-2.8</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>69.3</td>
<td>70.3</td>
<td>79.8 (March '08)</td>
<td>77.6</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
</table>
</body></html>

Year-to-Year Drop In U.S. CPI IsFirst Since '55 Thanks To Energy & Food Prices

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414k.jpg" align="left" border="0" height="265" width="353">
The effect of the recession in the western industrial
countries on the export oriented countries in Asia becomes more
apparent every day. Today it is Singapore's turn. Advance estimates of
Singapore's first quarter Gross Domestic Product show a seasonally
adjusted annualrate of decline of 19.7% following a 16.4% rate of
decline in the fourth quarter of 2008. (The Advance estimates of GDP
for the first quarter of 2009 are computed largely from data for
January and February. They are intended to be an early indication of
changes in GDP and are subject to revision when more comprehensive data
become available.)
On a year over year basis, GDP declined 11.5% in the first
quarter, compared with a decline of 4.2% in the fourth quarter. The
manufacturing sector, depending heavily on foreign demand, is the worst
performing sector. It began to report year over year declines in the
second quarter of 2008, and is now reporting a year over year decline
of 29% for the first quarter of 2009. The Service industries have been
affected by the decline in tourism and in the first quarter of 2009
were 5.9% below the first quarter of 2008. Construction has been the
bright spot, showing large year over year increases as a result of a
substantial backlog of committed projects in housing and
infrastructure. The year to year changes in GDP, Manufacturing,
Construction and Services are shown in the attached chart.
The Economic Development Board of Singapore publishes data for
what they call "Production Clusters" that is, the output of firms
producing some of Singapore's more important exports. There are
clusters of Electronics, Chemicals, Biomedicals, Precision Engineering
and Transport firms. These data are produced monthly and are an
important part of the data on which the advance estimates of GDP are
based. The declines in the clusters shown below help explain the sharp
drop in manufacturing in the first quarter.
Given the sharp deterioration in Singapore's first quarter GDP
and the prospect for continued weak global demand, the Ministry of
Trade and Industry has reduced its estimate of GDP for the year 2009 to
a range of -6% to -9% from its January 21 estimate of -2% to -5%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">SINGAPORE</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08</th>
<th scope="col">2008&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">GDP&nbsp;&nbsp;
(y/y % Chg)</td>
<td>-11.5</td>
<td>-4.2</td>
<td>0.0</td>
<td>2.5</td>
<td>6.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-29.0</td>
<td>-10.7</td>
<td>-16.0</td>
<td>-5.6</td>
<td>12.6</td>
<td>-4.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>25.6</td>
<td>18.5</td>
<td>26.0</td>
<td>23.7</td>
<td>13.1</td>
<td>20.3</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Services</td>
<td>-5.9</td>
<td>-1.3</td>
<td>5.5</td>
<td>7.5</td>
<td>7.5</td>
<td>4.7</td>
</tr>
<tr>
<td class="firstcol">Production
Clusters&nbsp; (y/y % Chg)</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>Dec 08</td>
<td>Nov 08</td>
<td>Oct 08</td>
<td>Sep 08</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Electronics</td>
<td>-37.26</td>
<td>-43.43</td>
<td>-35.37</td>
<td>-19.92</td>
<td>-13.40</td>
<td>-14.49</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Chemicals</td>
<td>-22.13</td>
<td>-24.35</td>
<td>-23.19</td>
<td>-20.42</td>
<td>-7.09</td>
<td>3.01</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Biomedicals</td>
<td>-27.89</td>
<td>-30.22</td>
<td>21.49</td>
<td>18.43</td>
<td>-29.72</td>
<td>43.33</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Precision Engineering</td>
<td>-21.41</td>
<td>-36.83</td>
<td>-21.69</td>
<td>-18.53</td>
<td>-12.50</td>
<td>-3.46</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Transport</td>
<td>18.34</td>
<td>6.31</td>
<td>6.42</td>
<td>7.51</td>
<td>10.62</td>
<td>10.26</td>
</tr>
</tbody>
</table>
</body></html>

The effect of the recession in the western industrial countries on the export oriented countries in Asia becomes more apparent every day. Today it is Singapore's turn. Advance estimates of Singapore's first quarter Gross Domestic [...]

Singapore's GDP To Decline 6% To 9% In 2009 Says Ministry Of Trade And Industry

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414i.jpg">
Inventory decumulation remains a dominant trend behind the current economic downturn. Decumulation subtracted 0.3 percentage points from GDP growth last year after a 0.4 percentage point subtraction in 2007, even before the recession started. That degree of subtraction probably intensified early this year. Business inventories dropped 1.3% m/m during February. The decline followed a similar January shortfall and it was the sixth consecutive monthly dip. Over just the last three months, inventories have fallen at a 15.2% annual rate, a record for the series which dates back to 1980.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414j.jpg">
Lower business sales (not to mention the weakness in pricing) continues to propel the inventory correction. Though sales rose 0.2% in February they are down at a 16.2% annual rate over the last three months. The only good news is that the recent rate of decline in sales eased to -16.2% from the peak -40.7% rate this past fall.
Retailers&#39; inventories fell another sharp 1.2% during February. The three-month rate of decline remained quite strong at 16.3% which was just off the record. The motor vehicle sector has led that decline, shedding inventories at a 32.1% rate over the last three months. Accentuating the downward trend, non-auto retail inventories fell at an 8.6% rate since the fall. Furniture inventories have been dropped at a 15.7% annual rate during the last three months while there&#39;s been a 13.5% rate of inventory reduction amongst general merchandise retailers. Rounding out the picture is a 6.2% rate of decline amongst apparel sellers. These cutbacks have been enough to drop the inventory-to-sales ratio amongst retailers to its lowest level since last September.
The inventory cutbacks overall, however, have done little to reduce the I/S ratio for total business. It remained in February near its highest level since 2001 due the wholesale and the factory sectors.
The Peopling of Macroeconomics: Microeconomics of Aggregate Consumer Expenditures from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q1/brq109_peopling-of-macroeconomics.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Business Inventories (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-1.3</td>
<td>-1.3</td>
<td>-3.5</td>
<td>0.6</td>
<td>4.1</td>
<td>6.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-1.2</td>
<td>-1.8</td>
<td>-6.6</td>
<td>-3.2</td>
<td>2.9</td>
<td>3.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Auto</td>
<td>-0.4</td>
<td>-0.7</td>
<td>-3.2</td>
<td>-1.8</td>
<td>2.9</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-1.5</td>
<td>-0.9</td>
<td>-1.7</td>
<td>3.1</td>
<td>6.2</td>
<td>8.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-1.2</td>
<td>-1.1</td>
<td>-2.0</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2</td>
</tr>
</tbody>
</table>


</html>

Inventory decumulation remains a dominant trend behind the current economic downturn. Decumulation subtracted 0.3 percentage points from GDP growth last year after a 0.4 percentage point subtraction in 2007, even before the recession [...]

U.S. Businesses Inventories Fall Further

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414f.jpg">
U.S. producer prices for finished goods fell last month for the first time this year. The 1.2% decrease followed the 0.1% February uptick and it contrasted with Consensus expectations for no change in last month&#39;s index level. The decline was led by finished energy prices which fell for the first time in three months. They posted a 12.1% (-25.5% y/y) drop. Finished gasoline prices fell 13.1% which was the first since December (-50.7% y/y) while home heating oil prices fell another 13.2% (-57.0% y/y). Natural gas prices dropped 2.4% (-8.2% y/y).<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414g.jpg">
Prices of core finished consumer goods rose just 0.1% (4.1% y/y) after the strong 0.4% February rise. Durable consumer goods prices were unchanged for the weakest reading since November (+3.0% y/y) while core nondurable goods prices increased another 0.3% (5.1% y/y). Finally, capital equipment prices fell for the first time since the end of 2007. A drop of 0.2% shaved its year-to-year gain to 3.4%, down from its high of 4.3% last October.
Prices for finished foods continued lower with a 0.7% decline (-1.0% y/y). The drop was led by lower meat (-11.1% y/y) and dairy product costs (-15.1% y/y).
Falling again were prices for intermediate goods which should foreshadow even lower finished goods prices. Intermediate goods prices nearly doubled their February decline with a 1.5% drop and the 9.0% y/y shortfall was a record. Excluding food &amp; energy, prices also remained weak as they posted a 0.3% drop, their sixth monthly decline. The 1.6% y/y decline remained the weakest change in prices since early 2002.<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414h.jpg">
The crude materials PPI dipped again as economic growth continued negative. Down 0.3%, the overall drop reflected a 1.6% decline in core pricing which pulled prices down by one-third from the year ago level. Copper prices are down by more than half from last year as are steel scrap and aluminum prices.
The Producer Price Index data is available in Haver&#39;s USECON database. More detailed data is in the PPI and in the PPIR databases.
Rethinking the Implications of Monetary Policy: How a Transactions Role for Money Transforms the Predictions of Our Leading Models from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q1/brq109_implications-of-monetary-policy.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a> (%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>-1.2</td>
<td>0.1</td>
<td>-3.6</td>
<td>6.4</td>
<td>3.9</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.0</td>
<td>0.2</td>
<td>3.8</td>
<td>3.4</td>
<td>2.0</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-1.5</td>
<td>-0.9</td>
<td>-9.0</td>
<td>10.5</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.3</td>
<td>-0.6</td>
<td>-1.6</td>
<td>7.6</td>
<td>2.8</td>
<td>6.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-0.3</td>
<td>-4.5</td>
<td>-38.9</td>
<td>21.2</td>
<td>11.9</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-1.6</td>
<td>1.5</td>
<td>&nbsp;-33.1</td>
<td>15.0</td>
<td>15.6</td>
<td>20.8</td>
</tr>
</tbody>
</table>
</body>
</html>

U.S. producer prices for finished goods fell last month for the first time this year. The 1.2% decrease followed the 0.1% February uptick and it contrasted with Consensus expectations for no change in last month's index level. The [...]

U.S. Finished Goods PPI Falls Unexpectedly While Core Prices Remain Stable

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414e.jpg" align="left" border="0" height="265" width="353">
Export and import growth trends in France continue to wither
at very rapid rates. In February exports rose as imports fell by 0.2%.
Still both exports and imports are dropping at better than a 33% annual
rate over three months. The negative rates of growth are actually
accelerating even despite the smaller decline in imports this month and
the rise in exports. 
 

France&#8217;s economy continues be under a great deal of pressure.
Declining domestic activity lies behind the drop in French imports as
surely as weak foreign growth lies behind the poor performance of
French exports. French industrial output declined by 0.5% in February
and is off by 15.5% Yr/Yr. meanwhile for all of EMU IP fell by 3.2% in
January and was off by 17.5 Yr/Yr. French exports are facing hostile
international conditions both within the Zone and outside of it.
Despite the bounce in exports in February, it is too soon to be
expecting anything good out of export growth in the immediate future. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="6" scope="col"> French Trade trends for goods</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Feb-09</td>
<td> Jan-09</td>
<td> 3M</td>
<td> 6M</td>
<td> 12M</td>
</tr>
<tr class="grey2">
<td class="firstcol">Balance*</td>
<td>-&#8364;&#8364; 4,107.00</td>
<td>-&#8364;&#8364; 3,714.00</td>
<td>-&#8364;&#8364; 3,604.67</td>
<td>-&#8364;&#8364; 4,657.00</td>
<td>-&#8364;&#8364; 4,619.42</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">Exports</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; All Exp</td>
<td>1.0%</td>
<td>-11.9%</td>
<td>-34.3%</td>
<td>-33.5%</td>
<td>-23.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>11.5%</td>
<td>-29.4%</td>
<td> -31.8%</td>
<td>-39.8%</td>
<td>-27.3%</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">IMPORTS</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; All IMP</td>
<td>-0.2%</td>
<td>-2.2%</td>
<td>-33.1%</td>
<td>-30.9%</td>
<td>-18.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>7.5%</td>
<td>-1.5%</td>
<td> -18.0%</td>
<td>-25.0%</td>
<td>-16.9%</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">*Eur mlns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

Export and import growth trends in France continue to wither at very rapid rates. In February exports rose as imports fell by 0.2%. Still both exports and imports are dropping at better than a 33% annual rate over three months. The [...]

French Exports And Imports Drop

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414a.jpg" width="353">
The recent recovery in consumer expenditures stuttered last month. March retail sales fell 1.1% after a 0.3% February increase that was revised up slightly. Some of that stutter reflected less money spent on gasoline but it nevertheless abruptly ended the sales recovery of the prior two months.Moreover, the latest decline in retail sales fell well short of expectations for a 0.3% increase. The retail sales data are available in Haver&#39;s USECON database.
Fewer purchases of motor vehicles led the weakness in consumer spending last month with a 2.3% decline. The decline contrasted with the 7.8% recovery in unit vehicle sales already reported by automakers in March. Also somewhat contradictory was a decline of 1.6% in gasoline service station sales despite a 1.8% rise in gasoline prices.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414b.jpg" width="353">
Sales of autos and gasoline were not, however, the main disappointments underlying last month&#39;s retail sales report. Sales at furniture, electronics &amp; appliance stores fell 3.8% (-11.3% y/y) and fully retraced the increases of the prior two months. Furniture store sales alone fell 1.7% (-13.1% y/y) after their modest 0.5% February increase while sales of electronics &amp; appliances collapsed by 5.9% (-9.5% y/y), erasing most of the prior two months&#39; gains.
In the soft goods area apparel store sales dropped 1.8% (-5.1% y/y), retracing much of their 2.8% February gain. That decline was accompanied by a 0.2% (+1.3% y/y) downtick in sales at general merchandise stores after two months of strong increase.
And internet purchases suffered as well. Sales at non-store retailers continued their earlier downtrend as they posted a sharp 1.7% drop during March. The downtrend is notable for its duration and magnitude. Year-to-year the decline amounts to 5.0% versus a 2008 gain of 3.7% and the double-digit increases of the prior three years. And dining out did not dull the pain of recession as fewer meals were served outside the home. Restaurant sales reversed their February rise with a 1.4% (+2.2% y/y) March decline.
Building materials sales continued down and posted their eighth consecutive monthly drop. The 0.6% March decline pulled them 9.2% below last year&#39;s level.
Four Questions about the Financial Crisis is this mornings speech by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20090414a.htm">here.</a>
Trends in consumer sentiment and spending from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a> (%)</td>
<td>-1.1</td>
<td>0.3</td>
<td>1.9</td>
<td>-9.4</td>
<td>-0.5</td>
<td>4.2</td>
<td>5.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>-0.9</td>
<td>1.0</td>
<td>1.6</td>
<td>-6.0</td>
<td>2.8</td>
<td>4.6</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Less Gasoline</td>
<td>-0.8</td>
<td>0.7</td>
<td>1.4</td>
<td>-1.6</td>
<td>1.8</td>
<td>4.2</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body>
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The recent recovery in consumer expenditures stuttered last month. March retail sales fell 1.1% after a 0.3% February increase that was revised up slightly. Some of that stutter reflected less money spent on gasoline but it [...]

U.S. Retail Sales Backpedal

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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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Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.8% in April from 7.9% in March.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

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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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.

Economy in Brief: April 2009

Jump to:

Year-to-Year Drop In U.S. CPI Is First Since '55 Thanks To Energy & Food Prices

Year-to-Year Drop In U.S. CPI IsFirst Since '55 Thanks To Energy & Food Prices

Singapore's GDP To Decline 6% To 9% In 2009 Says Ministry Of Trade And Industry

U.S. Businesses Inventories Fall Further

U.S. Finished Goods PPI Falls Unexpectedly While Core Prices Remain Stable

French Exports And Imports Drop

U.S. Retail Sales Backpedal

U.S. Retail Sales Backpedal