Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513d.jpg" width="353">
The University of Michigan&#39;s reading of consumer sentiment in May fell 2.7% from April to 85.3. The decline contrasted to Consensus expectations for stability at 88.0.
Sentiment has fallen in each of the last five months and is down 17.8% from the January &#39;04 peak. During the last ten years there has been a 75% (inverse) correlation between the level of consumer sentiment and the y/y change in real PCE, although the correlation has fallen in recent years.
Consumer expectations were depressed mostly by a sense that unemployment would rise which generated expectations that real family income would decline, helped lower by an expected acceleration in price inflation.
The reading of current economic conditions fell 1.1% for the fourth consecutive monthly drop and reflected a sharp decline in the reading of personal finances to the lowest level since December 2003.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>85.3</td>
<td>87.7</td>
<td>-5.4%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>103.3</td>
<td>104.4</td>
<td>-0.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>73.7</td>
<td>77.0</td>
<td>-9.7%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
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The University of Michigan's reading of consumer sentiment in May fell 2.7% from April to 85.3. The decline contrasted to Consensus expectations for stability at 88.0. Sentiment has fallen in each of the last five months and is down [...]

U.S. Consumer Sentiment Depressed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513a.jpg" width="353">
Import prices surged 0.8% last month following an upwardly revised 2.0% spike in March. Consensus expectations had been for a moderate 0.3% increase.
Petroleum prices jumped another 3.1% m/m and the March gain was revised up. While crude oil moderated and rose just 1.0%, a 9.9% jump in &quot;other&quot; petroleum product prices and a 12.4% gain gas prices lifted the fuel total. So far in May the price of Brent Crude oil has traded roughly 5% below the April average of $52.22 per barrel and yesterday touched $46.63.
Import prices other than petroleum rose 0.4% last month and again mostly reflected strength in prices of foods &amp; beverages (0.4% m/m, 8.5% y/y) and in prices for industrial supplies &amp; materials less petroleum (2.1% m/m, 11.5% y/y).
During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies and a lower 57% against the real value of the dollar. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513b.jpg" width="353">
Prices for nonauto consumer goods fell 0.1% (+1.1% y/y) for the second down month and capital goods prices fell 0.1% (-0.5% y/y) for the third down month. Imported computer prices fell 1.1% (-7.1% y/y) although excluding computers capital goods prices rose a firm 0.3% (2.7% y/y).
Export prices again rose 0.6% on the strength of a 1.9% (14.0% y/y) surge in industrial materials.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.8%</td>
<td>2.0%</td>
<td>8.1%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>-2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>3.1%</td>
<td>12.3%</td>
<td>43.1%</td>
<td>30.5%</td>
<td>21.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.0%</td>
<td>2.6%</td>
<td>1.1%</td>
<td>-2.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.6%</td>
<td>0.6%</td>
<td>3.1%</td>
<td>3.9%</td>
<td>1.6%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
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Import prices surged 0.8% last month following an upwardly revised 2.0% spike in March. Consensus expectations had been for a moderate 0.3% increase. Petroleum prices jumped another 3.1% m/m and the March gain was revised up. While [...]

Import Prices Surged

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513c.jpg" width="353">
Total business inventories rose 0.4% in March and the y/y rate of inventory accumulation continued strong at 7.9%. The ratio of inventories-to-sales fell slightly, however, and returned to the record low average of last year.
Retail inventories rose 0.3% in March and also gained 0.3% excluding autos. Inventories of furniture &amp; electronics increased 0.6% (6.2% y/y) following two months of decline and general merchandise doubled the prior month&#39;s increase with a 1.0% surge (6.6% y/y). Apparel inventories rose 0.5% (4.3% y/y).
Factory sector inventories grew 0.6% for the second month and the 8.9% increase versus last year remained the strongest since 1989.
Wholesale inventory accumulation moderated to 0.4%. During the last ten years there has been a 64% correlation between the y/y change in wholesale inventories and the change in imports of merchandise.
Overall business sales recovered 0.7% (6.7% y/y) after the 0.5% decline in February.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">March</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>0.5%</td>
<td>7.9%</td>
<td>7.7%</td>
<td>1.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.3%</td>
<td>0.4%</td>
<td>4.8%</td>
<td>5.7%</td>
<td>3.9%</td>
<td>5.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.3%</td>
<td>0.5%</td>
<td>6.5%</td>
<td>5.9%</td>
<td>2.0%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.4%</td>
<td>0.6%</td>
<td>10.8%</td>
<td>10.8%</td>
<td>2.0%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.6%</td>
<td>0.6%</td>
<td>8.9%</td>
<td>7.5%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
</tbody>
</table>
</body>
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Total business inventories rose 0.4% in March and the y/y rate of inventory accumulation continued strong at 7.9%. The ratio of inventories-to-sales fell slightly, however, and returned to the record low average of last year. Retail [...]

U.S. Business Inventories Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513c.jpg" width="353">
Total business inventories rose 0.4% in March and the y/y rate of inventory accumulation continued strong at 7.9%. The ratio of inventories-to-sales fell slightly, however, and returned to the record low average of last year.
Retail inventories rose 0.3% in March and also gained 0.3% excluding autos. Inventories of furniture &amp; electronics increased 0.6% (6.2% y/y) following two months of decline and general merchandise doubled the prior month&#39;s increase with a 1.0% surge (6.6% y/y). Apparel inventories rose 0.5% (4.3% y/y).
Factory sector inventories grew 0.6% for the second month and the 8.9% increase versus last year remained the strongest since 1989.
Wholesale inventory accumulation moderated to 0.4%. During the last ten years there has been a 64% correlation between the y/y change in wholesale inventories and the change in imports of merchandise.
Overall business sales recovered 0.7% (6.7% y/y) after the 0.5% decline in February.

<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/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">March</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>0.5%</td>
<td>7.9%</td>
<td>7.7%</td>
<td>1.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.3%</td>
<td>0.4%</td>
<td>4.8%</td>
<td>5.7%</td>
<td>3.9%</td>
<td>5.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.3%</td>
<td>0.5%</td>
<td>6.5%</td>
<td>5.9%</td>
<td>2.0%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.4%</td>
<td>0.6%</td>
<td>10.8%</td>
<td>10.8%</td>
<td>2.0%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.6%</td>
<td>0.6%</td>
<td>8.9%</td>
<td>7.5%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
</tbody>
</table>
Import Prices Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 13, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513a.jpg" width="353">
Import prices surged 0.8% last month following an upwardly revised 2.0% spike in March. Consensus expectations had been for a moderate 0.3% increase.
Petroleum prices jumped another 3.1% m/m and the March gain was revised up. While crude oil moderated and rose just 1.0%, a 9.9% jump in &quot;other&quot; petroleum product prices and a 12.4% gain gas prices lifted the fuel total. So far in May the price of Brent Crude oil has traded roughly 5% below the April average of $52.22 per barrel and yesterday touched $46.63.
Import prices other than petroleum rose 0.4% last month and again mostly reflected strength in prices of foods &amp; beverages (0.4% m/m, 8.5% y/y) and in prices for industrial supplies &amp; materials less petroleum (2.1% m/m, 11.5% y/y).
During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies and a lower 57% against the real value of the dollar. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513b.jpg" width="353">
Prices for nonauto consumer goods fell 0.1% (+1.1% y/y) for the second down month and capital goods prices fell 0.1% (-0.5% y/y) for the third down month. Imported computer prices fell 1.1% (-7.1% y/y) although excluding computers capital goods prices rose a firm 0.3% (2.7% y/y).
Export prices again rose 0.6% on the strength of a 1.9% (14.0% y/y) surge in industrial materials.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.8%</td>
<td>2.0%</td>
<td>8.1%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>-2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>3.1%</td>
<td>12.3%</td>
<td>43.1%</td>
<td>30.5%</td>
<td>21.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.0%</td>
<td>2.6%</td>
<td>1.1%</td>
<td>-2.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.6%</td>
<td>0.6%</td>
<td>3.1%</td>
<td>3.9%</td>
<td>1.6%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Depressed 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 13, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513d.jpg" width="353">
The University of Michigan&#39;s reading of consumer sentiment in May fell 2.7% from April to 85.3. The decline contrasted to Consensus expectations for stability at 88.0.
Sentiment has fallen in each of the last five months and is down 17.8% from the January &#39;04 peak. During the last ten years there has been a 75% (inverse) correlation between the level of consumer sentiment and the y/y change in real PCE, although the correlation has fallen in recent years.
Consumer expectations were depressed mostly by a sense that unemployment would rise which generated expectations that real family income would decline, helped lower by an expected acceleration in price inflation.
The reading of current economic conditions fell 1.1% for the fourth consecutive monthly drop and reflected a sharp decline in the reading of personal finances to the lowest level since December 2003.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<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/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>85.3</td>
<td>87.7</td>
<td>-5.4%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>103.3</td>
<td>104.4</td>
<td>-0.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>73.7</td>
<td>77.0</td>
<td>-9.7%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
European Consumer Inflation Continues Moderate in the Face of Rising Energy 
by <a href="/comment/Stone.html">Carol Stone</a> May 13, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513e.jpg" width="353">
A recurrent theme of our reports over the last couple of months has been the continuation of low consumer price inflation despite high energy prices. This phenomenon has persisted through April in several European countries that reported their latest CPI data today.
This is especially evident in France, where the total CPI has even slowed somewhat in the face of the recent surge in energy costs. The first four months of 2005 averaged year-on-year inflation of 1.8%, compared with a five-year average of 2.0%. Food is cheaper, clothing prices are little changed and manufactured goods have declined outright. Services prices have been rising 2.7%, but this is less than their 3%+ pace in 2002.
In Finland and Sweden, which we mentioned here a month ago, the 12-month change in total CPI ticked up by 0.1% and 0.2%, respectively from their March rates. But that still leaves Finland at 1.1% and Sweden at a mere 0.3%. In Spain, total inflation was 3.5% year-on-year in April, with some signs of upward creep. But the pace excluding energy has been steady at 2.9% for the last two years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050513f.jpg" width="353">
Perhaps we are simply short-sighted in these comments; perhaps it simply takes longer than a year for the &quot;second-round&quot; effects of sustained energy prices to filter through to other items. Or perhaps, as we noted elsewhere recently, the second-round effects will appear more as restraints to demand growth than spurs to higher inflation.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/G10.HTM">Yr/Yr % Changes</a> Not Seasonally Adjusted</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>1.8</td>
<td>1.9</td>
<td>1.6</td>
<td>2.1</td>
<td>1.2</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Finland</td>
<td>1.1</td>
<td>1.0</td>
<td>0.2</td>
<td>0.4</td>
<td>0.6</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Sweden</td>
<td>0.3</td>
<td>0.1</td>
<td>0.7</td>
<td>0.3</td>
<td>1.3</td>
<td>2.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>3.5</td>
<td>3.4</td>
<td>3.3</td>
<td>3.2</td>
<td>2.6</td>
<td>4.5</td>
</tr>
<tr>
<td class="firstcol">US</td>
<td>--</td>
<td>3.1</td>
<td>3.0</td>
<td>3.3</td>
<td>1.9</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512e.jpg" width="353">
The Euro-Zone had 0.5% GDP growth in Q1, according to the Eurostat &quot;Flash&quot; estimate released today. This produced a year-on-year result of 1.4%, moderately weaker than any quarter since Q4 2003. In these early &quot;Flash&quot; figures, no details are available by type of expenditure or industry, so there&#39;s no way to tell what factors contributed to the performance.
We do, however, know something about where the developments took place. Germany experienced a nice rebound, reaching 1.0% after two quarters of virtually no growth at all. Among other Euro-Zone countries, they join the UK with its 0.6% gain in boosting Europe&#39;s economy.
Elsewhere, results were not so attractive. Italy lost 0.5% and the Netherlands, 0.1%; Belgian GDP was unchanged. Both Italy and the Netherlands GDP also decreased year-on-year.
The Netherlands reported its expenditure breakdown; private consumption edged slightly lower, and investment contracted more sharply after a good gain in Q4. Net exports decreased. The only positive input came in inventories, which grew &#128;327 million compared to &#128;192 million in Q4.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512f.jpg" width="353">
These data are mixed now by calculation methodology. As noted in the table below, &quot;real&quot; GDP for the overall Euro-Zone remains expressed in fixed-weights and 1995 prices; Italy&#39;s own data are also still on this basis. Germany, the UK and the Netherlands have all switched to annual chain-weighting, but Germany&#39;s reference year is 2000, the Netherlands, 1995 and the UK, 2001. Euro-Zone conventions call for all countries to switch to chain-linking by late 2006. There are also differences in the treatment of imputed charges for financial services, so-called &quot;FISIM&quot;. These are to be reconciled for the most part by the end of this year, with a few countries in 2006. Consumption and net exports will be affected. 

<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/G10/G10.HTM">GDP % Changes</a></th>
<th scope="col">1 Qtr 2005</th>
<th scope="col">4 Qtr 2004</th>
<th scope="col">Year/ Year</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone (fixed 1995&#128;)</td>
<td>0.5</td>
<td>0.2</td>
<td>1.4</td>
<td>1.8</td>
<td>0.5</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Germany (chain 2000&#128;)</td>
<td>1.0</td>
<td>-0.1</td>
<td>0.0</td>
<td>1.6</td>
<td>0.0</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy (fixed 1995 &#128;)</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-0.2</td>
<td>1.0</td>
<td>0.4</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">Netherlands (chain 1995&#128;)</td>
<td>-0.1</td>
<td>-0.0</td>
<td>-0.3</td>
<td>1.4</td>
<td>-0.9</td>
<td>0.6</td>
</tr>
</tbody>
</table>
</body>
</html>

The Euro-Zone had 0.5% GDP growth in Q1, according to the Eurostat "Flash" estimate released today. This produced a year-on-year result of 1.4%, moderately weaker than any quarter since Q4 2003. In these early "Flash" figures, no [...]

German Q1 Growth of 1% Boosts Euro-Zone Result to 0.5%

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512d.jpg" width="353">
April tax revenues surged and reduced the U.S. federal government&#39;s budget deficit during the first seven months of FY 2005 by 16.5% versus the first the seven months of FY 2004.
Net receipts for the first seven months of FY05 jumped 13.7% y/y. Individual tax receipts surged 16.1% versus FY04 as April personal taxes rose 43.3% against April of last year. Corporate tax receipts continued up strongly. Reflecting the improved job market, employment taxes grew 6.0% versus 1.3% growth last year.
Growth in federal outlays remained about stable at 7.3% versus the first seven months of 2005. Growth in Medicare outlays was strong at 9.1% and social security outlays grew 5.5%. Veterans benefits grew 15.2% and defense spending slowed to 7.0% growth. Interest expense grew 11.1% with higher rates.

<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/@E1/@E106/@E10602/@E10602.HTM">US Government Finance</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">FY &#39;05 - YTD</th>
<th scope="col">FY2004</th>
<th scope="col">FY2003</th>
<th scope="col">FY2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$57.7B</td>
<td>$-71.2B</td>
<td>$-236.9B</td>
<td>$-412.1B</td>
<td>$-377.6B</td>
<td>$-157.8B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Net Revenues</td>
<td>$277.6B</td>
<td>$148.7B</td>
<td>13.7%</td>
<td>5.5%</td>
<td>-3.8%</td>
<td>-6.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Net Outlays</td>
<td>$219.9B</td>
<td>$210.0B</td>
<td>7.3%</td>
<td>6.1%</td>
<td>7.4%</td>
<td>7.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

April tax revenues surged and reduced the U.S. federal government's budget deficit during the first seven months of FY 2005 by 16.5% versus the first the seven months of FY 2004. Net receipts for the first seven months of FY05 jumped [...]

Higher Tax Receipts Lowered U.S. Budget Deficit

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512c.jpg" width="353">
The Leading Index of the Major 7 OECD economies fell for the second month. The 0.6% decline in March followed a downwardly revised 0.5% drop in February and pulled the index&#39;s six month growth rate negative.
During the last ten years there has been a 69% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven countries in the OECD.
The leaders for the European Union (15 countries) declined for the fourth straight month and the six month growth rate of 0.1% was down from roughly 6% a year ago. The German leaders fell for the fifth month in the last six due to weaker new orders, a negative yield curve and a worsening business climate. The six month growth rate fell to a -1.7%. The French leaders fell for the fifth consecutive month and the six month growth went negative for the first time since May 2003 as new job vacancies remained depressed, share prices meandered and industrial sector prospects deteriorated. The Italian leaders dipped for the forth month in five. The six month growth rate of -0.6% remained negative as it has since last May due to a lower future tendency of orders books and of production.
The leading index for the US economy fell a hard 1.0% and six month growth went negative for the first time since April 2003. A negative yield curve and a deteriorating business climate indicator caused the decline. The leaders for Japan fell for the fourth straight month and six month growth was a negative 0.7% due to a tighter yield curve and fewer overtime hours worked.
The UK economic leaders slipped for the fifth consecutive month with six month growth solidly negative at -1.2% due to higher interest rates and weaker export prospects.The Canadian leaders have trended lower for a year and six month growth of -3.5% was the worst in two years. The yield curve is sharply inverted and housing starts are down.
The latest OECD Leading Indicator report can be found <a href="http://www.oecd.org/dataoecd/60/47/34858128.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/OECDMEI/OECDMEI.HTM">OECD</a></th>
<th scope="col">March</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Leading Index&nbsp;</td>
<td>101.37</td>
<td>102.00</td>
<td>-0.6%</td>
<td>101.99</td>
<td>97.51</td>
<td>96.33</td>
</tr>
<tr>
<td class="firstcol">&nbsp;6 Month Growth Rate</td>
<td>-1.3%</td>
<td>-0.1%</td>
<td>&nbsp;</td>
<td>3.6%</td>
<td>2.5%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Leading Index of the Major 7 OECD economies fell for the second month. The 0.6% decline in March followed a downwardly revised 0.5% drop in February and pulled the index's six month growth rate negative. During the last ten years [...]

OECD Leaders Lost More Forward Momentum

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512b.jpg" width="353">
For the third consecutive week, initial claims for unemployment insurance rose. The 4,000 increase to 340,000 was smaller than the gains during the earlier two weeks (the prior week&#39;s gain was revised slightly higher), but the latest level was 4.3% above the April average. Consensus expectations had been for 329,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims rose to 324,000 (-4.8% y/y).
Continuing claims for unemployment insurance rose 15,000 and the prior week&#39;s gain was revised down slightly.
The insured unemployment rate held at 2.0% for the third consecutive weeks.
Self-employed immigrants: An analysis of recent data from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflapril2005_213.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">05/07/05</th>
<th scope="col">04/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>340</td>
<td>336</td>
<td>1.2%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,598</td>
<td>-12.6%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
</html>

For the third consecutive week, initial claims for unemployment insurance rose. The 4,000 increase to 340,000 was smaller than the gains during the earlier two weeks (the prior week's gain was revised slightly higher), but the latest [...]

Initial Claims for Jobless Insurance Up For Third Week

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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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.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

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The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

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.

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- 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

Winnie Tapasanun

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Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

Robert Brusca

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The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

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Globally Manufacturing Weakens

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.

Economy in Brief: May 2005

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U.S. Consumer Sentiment Depressed

Import Prices Surged

U.S. Business Inventories Rose

U.S. Business Inventories Rose

German Q1 Growth of 1% Boosts Euro-Zone Result to 0.5%

Higher Tax Receipts Lowered U.S. Budget Deficit

OECD Leaders Lost More Forward Momentum

Initial Claims for Jobless Insurance Up For Third Week