Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090513a.jpg" width="353">
U.S. retail sales continued to struggle last month following the recovery earlier this year. In fact, virtually all of that recovery has been erased by the latest declines. April retail sales declined by 0.4% following their 1.3% March drop. Moreover, sales both during March and back to 2007 were revised lower with benchmark changes to the data series. The latest decline in retail sales fell short of expectations for no change month-to-month. The retail sales data are available in Haver&#39;s USECON database.
Unlike prior months, motor vehicle sales were not so much responsible for the decline in overall consumer purchases. Vehicle sales rose 0.2% following two months of sharp decline. However, the increase contrasted with the earlier report that unit vehicle sales fell 5.5% in April. Also contradictory was a 2.3% decline in gasoline service station sales despite a 4.6% m/m rise in gasoline prices.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090513b.jpg" width="353">
Elsewhere the news in last month&#39;s retail sales report was weak as discretionary spending was pulled back. Sales at furniture, electronics &amp; appliance stores fell another 1.7% (-13.1% y/y) following the 5.2% drop during March which was deeper than reported initially. Furniture store sales alone ticked down 0.5% (-14.2% y/y) while sales of electronics &amp; appliances again fell sharply. The 2.8% April drop (-12.0% y/y) followed a 7.8% March decline.
In the soft goods area apparel store sales slipped by 0.5% (-6.5% y/y) after a 2.9% March decline. Sales at general merchandise stores also staggered and slipped 0.1%. They are virtually unchanged over the last twelve months.
And internet purchases continued lower. Sales at non-store retailers slipped 0.1% (-7.8% y/y) after a 1.2% March drop. Restaurant sales also have been weak but they did rise 0.2% (1.4% y/y).
Building materials sales squeaked out a 0.2% increase last month but they still are down by 10.7% from last April.
Supply Shocks, Demand Shocks, and Labor Market Fluctuations from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/09/05/Braun.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">April</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a> (%)</td>
<td>-0.4</td>
<td>-1.3</td>
<td>0.4</td>
<td>-10.1</td>
<td>-0.7</td>
<td>3.3</td>
<td>5.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>-0.5</td>
<td>-1.2</td>
<td>1.1</td>
<td>-7.7</td>
<td>2.5</td>
<td>3.9</td>
<td>6.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Less Gasoline</td>
<td>-0.3</td>
<td>-1.0</td>
<td>0.8</td>
<td>-3.1</td>
<td>1.6</td>
<td>3.6</td>
<td>5.7</td>
</tr>
</tbody>
</table>
</body>
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U.S. retail sales continued to struggle last month following the recovery earlier this year. In fact, virtually all of that recovery has been erased by the latest declines. April retail sales declined by 0.4% following their 1.3% [...]

U.S. Retail Sales Decline For A Second Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090513a.jpg" align="left" border="0" height="265" width="353">
U.S. retail sales continued to struggle last month following
the recovery earlier this year. In fact, virtually all of that recovery
has been erased by the latest declines. April retail sales declined by
0.4% following their 1.3% March drop. Moreover, sales both during March
and back to 2007 were revised lower with benchmark changes to the data
series. The latest decline in retail sales fell short of expectations
for no change month-to-month. The retail sales data are available in
Haver's USECON database.
Unlike prior months, motor vehicle sales were not so much
responsible for the decline in overall consumer purchases. Vehicle
sales rose 0.2% following two months of sharp decline. However, the
increase contrasted with the earlier report that unit vehicle sales
fell 5.5% in April. Also contradictory was a 2.3% decline in gasoline
service station sales despite a 4.6% m/m rise in gasoline prices.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090513b.jpg" align="right" border="0" height="265" width="353">
Elsewhere the news in last month's retail sales report was
weak as discretionary spending was pulled back. Sales at furniture,
electronics &amp; appliance stores fell another 1.7% (-13.1% y/y)
following the 5.2% drop during March which was deeper than reported
initially. Furniture store sales alone ticked down 0.5% (-14.2% y/y)
while sales of electronics &amp; appliances again fell sharply. The
2.8% April drop (-12.0% y/y) followed a 7.8% March decline.
In the soft goods area apparel store sales slipped by 0.5%
(-6.5% y/y) after a 2.9% March decline. Sales at general merchandise
stores also staggered and slipped 0.1%. They are virtually unchanged
over the last twelve months.
And internet purchases continued lower. Sales at non-store
retailers slipped 0.1% (-7.8% y/y) after a 1.2% March drop. Restaurant
sales also have been weak but they did rise 0.2% (1.4% y/y).
Building materials sales squeaked out a 0.2% increase last
month but they still are down by 10.7% from last April.
Supply Shocks, Demand Shocks, and Labor Market
Fluctuations from the Federal Reserve Bank of St. Louis is
available <a href="http://research.stlouisfed.org/publications/review/09/05/Braun.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">April</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail
Sales &amp; Food Services</a> (%)</td>
<td>-0.4</td>
<td>-1.3</td>
<td>0.4</td>
<td>-10.1</td>
<td>-0.7</td>
<td>3.3</td>
<td>5.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Autos</td>
<td>-0.5</td>
<td>-1.2</td>
<td>1.1</td>
<td>-7.7</td>
<td>2.5</td>
<td>3.9</td>
<td>6.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Less Gasoline</td>
<td>-0.3</td>
<td>-1.0</td>
<td>0.8</td>
<td>-3.1</td>
<td>1.6</td>
<td>3.6</td>
<td>5.7</td>
</tr>
</tbody>
</table>
Euro Area IP Drops Again AllSectors Still Weak 
by <a href="/comment/Brusca.html">Robert
Brusca</a> May 13, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090513d.jpg" align="left" border="0">
Euro Area manufacturing output fell by 2.1% in March. The
21.2% drop Yr/Yr exceeds the 20.2% drop posted in February. The
sequential growth rate rates seem to have stabilized at a very torrid
pace of decline just under 30% at an annual rate. The capital goods
sector shows some slowdown in its decline in the Year/Year numbers but
the 3-mo growth rates for capital goods continue to deteriorate beyond
their readings for the six month growth rate. 
 

Germany, Italy and Spain have the most rapid declines in IP
growth over the past three months. Germany and Italy are also the two
worst over the last 12-months. Output declines in the UK have slowed
markedly in the last few months; they post an annual rate of decline of
only -12.9% over three months. 
 

For the quarter, massive declines in output are still being
registered. In Germany output is declining in the quarter at a 45%
annual rate. In France the decline is at a 25% annual rate. In Italy it
falls at a 34% annual rate. UK IP is falling at a 20% annual rate in
the quarter despite its recent greater stability. The upcoming EU
member country GDP growth rates for Q1 should be extremely weak 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col"> Euro
Area MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol"> Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Mar 
09</td>
<td>Feb 
09</td>
<td>Mar 
09</td>
<td>Feb 
09</td>
<td>Mar 
09</td>
<td>Feb 
09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro Area&nbsp;
Detail</td>
<td>Mar 
09</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td> Q-1</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG</td>
<td>-2.1%</td>
<td>-2.4%</td>
<td>-3.6%</td>
<td>-28.1%</td>
<td>-31.9%</td>
<td>-29.0%</td>
<td>-29.5%</td>
<td>-21.2%</td>
<td>-20.2%</td>
<td> -31.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer</td>
<td>-1.3%</td>
<td>-1.7%</td>
<td>-1.0%</td>
<td>-14.9%</td>
<td>-12.0%</td>
<td>-11.1%</td>
<td>-10.4%</td>
<td>-9.0%</td>
<td>-8.2%</td>
<td> -12.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Durables</td>
<td>-2.5%</td>
<td>-3.6%</td>
<td>-2.4%</td>
<td>-29.4%</td>
<td>-29.9%</td>
<td>-28.9%</td>
<td>-29.1%</td>
<td>-22.2%</td>
<td>-21.3%</td>
<td>--</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Non-durables</td>
<td>-1.0%</td>
<td>-1.5%</td>
<td>-0.9%</td>
<td>-12.6%</td>
<td>-9.8%</td>
<td>-8.1%</td>
<td>-7.5%</td>
<td>-6.8%</td>
<td>-6.4%</td>
<td>--</td>
</tr>
<tr class="grey2">
<td class="firstcol">Intermediate</td>
<td>-3.1%</td>
<td>-2.5%</td>
<td>-1.6%</td>
<td>-25.3%</td>
<td>-35.5%</td>
<td>-35.2%</td>
<td>-35.8%</td>
<td>-26.0%</td>
<td>-24.3%</td>
<td> -34.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capital</td>
<td>-0.5%</td>
<td>-2.9%</td>
<td>-7.2%</td>
<td>-35.6%</td>
<td>-41.6%</td>
<td>-33.1%</td>
<td>-36.2%</td>
<td>-22.8%</td>
<td>-24.2%</td>
<td> -40.0%</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Main
Euro Area Countries
and UK IP in MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Mar09</td>
<td>Feb09</td>
<td>Mar09</td>
<td>Feb09</td>
<td>Mar09</td>
<td>Feb09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol"> MFG Only</td>
<td>Mar 
09</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-1- 
Date</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany:</td>
<td>-0.2%</td>
<td>-3.5%</td>
<td>-7.7%</td>
<td>-37.8%</td>
<td>-48.4%</td>
<td>-37.1%</td>
<td>-40.0%</td>
<td>-22.9%</td>
<td>-22.9%</td>
<td> -45.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France: IP ex Construction</td>
<td>-1.4%</td>
<td>-0.9%</td>
<td>-3.9%</td>
<td>-22.2%</td>
<td>-23.0%</td>
<td>-25.1%</td>
<td>-25.5%</td>
<td>-16.1%</td>
<td>-15.9%</td>
<td> -24.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>-4.7%</td>
<td>-5.0%</td>
<td>-1.3%</td>
<td>-36.4%</td>
<td>-35.7%</td>
<td>-34.8%</td>
<td>-33.7%</td>
<td>-25.6%</td>
<td>-21.6%</td>
<td> -34.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>-5.1%</td>
<td>1.1%</td>
<td>-8.2%</td>
<td>-39.7%</td>
<td>-21.4%</td>
<td>-36.5%</td>
<td>-25.5%</td>
<td>-13.9%</td>
<td>-24.5%</td>
<td> -37.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK: EU member</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-3.1%</td>
<td>-12.9%</td>
<td>-19.3%</td>
<td>-18.0%</td>
<td>-19.7%</td>
<td>-12.9%</td>
<td>-13.4%</td>
<td> -20.3%</td>
</tr>
</tbody>
</table>
U.S. Business Inventory
Decumulation Intensifies 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 13, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090513f.jpg" align="left" border="0">
Total business inventories fell another 1.0% during March,
down for the seventh straight month. These declines have given rise to
a three-month decumulation rate of 13.5%. That is the strongest in the
series' history which dates back to 1980. The recent cutback in
inventory accumulation is in reaction to an 11.0% rate of decline in
business sales. However, the strong inventory cutbacks have done little
to reduce the inventory/sales ratio which, at 1.44, was at its highest
level since the recession of 2001. Illustrating the degree of inventory
back-up is the increase in the I/S ratio during the last year, which is
the swiftest since 1982. The rise ended a twenty-eight year downtrend.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090513e.jpg" align="right" border="0">
Retailers cut inventories by 0.7% in March and at a 13.2%
annual rate during the last three months, nearly the fastest in the
series' history. Motor vehicle inventories continued to lead the
decumulation and fell at a 30.1% rate during the last three months.
Nevertheless, the inventory-to-sales ratio for automobiles remained
near its historic high at 2.59. So unless sales recover soon, expect
further production cuts.
Outside of autos, retailers continued to reduce the levels of
unwanted products. Furniture, home furnishings &amp; electronics
inventories fell 0.5% in March and they are off 8.6% during the past
year. Apparel retailers ratcheted up the speed of cutbacks with a 1.4%
March drawdown. Over the last three months they're down at a 9.7%
annual rate, nearly the swiftest on record. General merchandise
inventories bucked the trend, however, and rose 0.8% in March but
they're still off at a 4.8% rate during the last three months. Despite
the cuts the inventory-to-sales ratio for the nonauto retail sector
remained high.
The business sales and inventory data are available in Haver's
USECON database.
Inventory Accelerator In General Equilibrium
from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/wp/2009/2009-010.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">Business
Inventories (%)</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">Total</td>
<td>-1.0</td>
<td>-1.4</td>
<td>-1.2</td>
<td>-4.8</td>
<td>0.6</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-0.7</td>
<td>-1.2</td>
<td>-1.6</td>
<td>-6.9</td>
<td>-3.1</td>
<td>2.5</td>
<td>3.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Retail excl. Auto</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-0.6</td>
<td>-3.1</td>
<td>-1.8</td>
<td>2.7</td>
<td>4.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-1.6</td>
<td>-1.7</td>
<td>-0.9</td>
<td>-3.5</td>
<td>3.1</td>
<td>6.2</td>
<td>8.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.8</td>
<td>-1.3</td>
<td>-1.1</td>
<td>-3.8</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512h.jpg" width="353">
According to the National Federation of Independent Business (NFIB), small business optimism recovered sharply last month. The index level of 86.8 was its highest level since last November. However, despite the increase business were far from ebbulient and the index was down 5.1% year-to-year.
During the last ten years there has been a 49% correlation between the level of the NFIB index and the two-quarter change in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512i.jpg" width="353">
The latest rise in the index occurred as the percentage expecting the economy to improve jumped to 2% after spending several months in negative territory. Also jumping sharply was the percentage expecting credit conditions to ease while the percentage reporting that now is a good time to expand the business rose to its highest since January. During the next 3-6 months, plans for capital spending actually improved to the highest level since January.
The percentage planning to raise employment made up a sharp March decline but remained a net negative 5%. However, the percentage of respondents with one or more job openings fell to a new low for the series of 9%, the least since 1982. During the last ten years there has been a 71% correlation between the NFIB employment percentage and the y/y change in nonfarm payrolls.
The largest, single most important problems seen by business were poor sales (32%), taxes (22%), government requirements (11%), insurance cost and availability (8%), competition from large businesses (6%) and inflation (4%).
The percentage of firms planning to raise prices ticked up to 1%, near the record low. Price discounts were evident as the percentage of firms actually raising prices fell further into negative territory, and the reading was a record low. During the last ten years there has been a 69% correlation between the y/y change in the producer price index and the level of the NFIB price index.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The NFIB figures can be found in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">April</th>
<th scope="col">Marh</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>
<td class="firstcol">Small Business Optimism Index (SA, 1986=100)</td>
<td>86.8</td>
<td>81.0</td>
<td>-5.1%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
</tbody>
</table>
</body>
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According to the National Federation of Independent Business (NFIB), small business optimism recovered sharply last month. The index level of 86.8 was its highest level since last November. However, despite the increase business were [...]

U.S. Small Business Optimism Recovers

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512e.jpg" width="353">
Despite the weakness in the job market, the consumer continues to visit shopping centers putting chain store sales on a firmer footing. According to the International Council of Shopping Centers-Goldman Sachs Index store sales rose another 0.3% last week after the prior week&#39;s 0.7% increase. For the month so far, chain store sales are up 0.3% from April after that month&#39;s 1.4% rise from the March average.
During the last ten years there has been a 64% correlation between the year-to-year growth in chain store sales and the growth in general merchandise sales. These weekly figures are available in Haver&#39;s SURVEYW database.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The gains in sales occurred as the outlook brightened. The leading indicator of sales moved to its highest level since January. The year-to-year change has improved to a negative 1.8%, up from the 6% rate of decline last Fall.
Lending Standards in Mortgage Markets from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/es/09/ES0923.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">05/09/09</th>
<th scope="col">05/02/09</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>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>492.7</td>
<td>491.3</td>
<td>0.5%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


</html>

Despite the weakness in the job market, the consumer continues to visit shopping centers putting chain store sales on a firmer footing. According to the International Council of Shopping Centers-Goldman Sachs Index store sales rose [...]

U.S. Chain Store Sales Rise Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512f.jpg" width="353">
Regular gasoline prices last week continued their recent rise and settled at $2.24 per gallon last week. That price was up 63 cents (39.1%) from the December low and it was the highest level since November. Yesterday, cash market prices were higher still at $1.65 per gallon versus $1.59 averaged last week and it was the highest price since last October. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; Daily databases.
The gasoline price rise continues to reflect, in part, higher crude oil prices. Prices averaged $56.00 last week for a barrel of West Texas Intermediate, up $4.90 from the prior week and up from the December low of $32.37 per barrel. Yesterday, crude oil prices rose even further to $58.50. Prices reached a high of $145.66 last July. The latest increases occurred despite a 3.9% rise in crude oil production versus last year. The figures on crude oil production and inventories are available in Haver&#39;s Weekly Oil Statistics database.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512g.jpg" width="353">
Higher gasoline prices and economic weakness have lowered miles-driven, though the rate of decline has eased. Gasoline demand last week fell 2.4% y/y versus the 4.8% rate of decline seen last October. The change in demand is measured using the latest four weeks versus the same four weeks in 2008. Demand for all petroleum products was down 7.9% y/y led by a 39.3% drop in demand for residual fuel oil and a 15.8% drop in distillate demand. The price gains have occurred despite an 11.7% rise in inventories of crude oil &amp; petroleum products. These numbers are available in Haver&#39;s OILWKLY database.
The price of natural gas rose last week to $3.78 per mmbtu (-66.1% y/y) and it was the first w/w increase since March. Near the lowest level since 2002, the latest average price was down by three-quarters from the high reached in early-July of $13.19/mmbtu.
The Impact of Inflation and Unemployment on Subjective Personal and Country Evaluation from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/09/05/Gandelman.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/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">05/11/09</th>
<th scope="col">05/04/09</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>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.24</td>
<td>2.08</td>
<td>-39.8%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>56.00</td>
<td>51.07</td>
<td>-54.5%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

Regular gasoline prices last week continued their recent rise and settled at $2.24 per gallon last week. That price was up 63 cents (39.1%) from the December low and it was the highest level since November. Yesterday, cash market [...]

Gasoline Prices Rise To Their Highest Since Early-November

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512d.jpg" align="left" border="0" height="265" width="353">
In the UK overall MFG output is flat in March. Despite the
fall, the output of durable consumer goods is up in March and its trend
shows a diminishing pace of decline. Consumer nondurable output is up
for three months in a row and sports an accelerating up-trend. For
intermediate goods the pace of decline is still fairly rapid and its
growth rate profile is more or less stuck at seriously negative rates
of growth. Capital goods remains as the most severely impacted sector
with decelerations in output growth still in place. 
 

By detailed sector, food, drink and tobacco output is
accelerating and showing strong positive growth over three-months.
Textile and leather goods output has accelerated its decline over
three-months. Motor vehicles output is still dire with very strong
rates of negative growth. Mining activity has worsened over six months
then maintained that strong pace of decline. Overall utilities output
has been trimmed increasingly aggressively in recent months &#8211;a bad
overall sign. 
 

While the UK does have some bright spots and the retail BRC
survey has produced a strong retail sales result for April, the UK
trends are still seriously troubled for industry. Signs of some
improvement in retailing and an increase in housing sentiment are
helpful since a consumer revival that stokes demand will lift output.
And while there are some encouraging signs from the consumer there is
little evidence so far that this is helping capital goods industries
much. The cessation of the drop in IP is good news. But the industrial
sector is caught between what seems to be some improvement by the
consumer amid still worsening conditions for capital goods. The nascent
improvement in the UK MFG PMI suggests that there may be some support
in the pipeline for the sector as a whole, however. Meanwhile the
up-turn in the three-month trend for IP itself also suggests that the
worst may be over. Industry remains seriously troubled, but this is
probably the beginning of a true turn for the UK economy. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="11" scope="col">UK IP and MFG </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Mar 09</td>
<td>Feb 09</td>
<td>Mar 09</td>
<td>Feb 09</td>
<td>Mar 09</td>
<td>Feb 09</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">UK MFG</td>
<td>Mar 09</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1- Date</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; MFG</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-3.1%</td>
<td>-12.9%</td>
<td>-19.3%</td>
<td>-18.0%</td>
<td>-19.7%</td>
<td>-12.9%</td>
<td>-13.4%</td>
<td>-7.4%</td>
</tr>
<tr>
<td class="firstcol" colspan="11">Consumer</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; C-Durables</td>
<td>0.7%</td>
<td>-0.6%</td>
<td>-4.8%</td>
<td>-17.6%</td>
<td>-30.8%</td>
<td>-26.4%</td>
<td>-27.0%</td>
<td>-19.4%</td>
<td>-21.5%</td>
<td>-7.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; C-Non-durables</td>
<td>0.8%</td>
<td>0.8%</td>
<td>0.5%</td>
<td>9.2%</td>
<td>3.4%</td>
<td>-0.6%</td>
<td>-4.2%</td>
<td>-3.0%</td>
<td>-4.4%</td>
<td>9.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>-1.1%</td>
<td>-1.3%</td>
<td>-3.7%</td>
<td>-21.8%</td>
<td>-23.7%</td>
<td>-23.4%</td>
<td>-21.1%</td>
<td>-14.7%</td>
<td>-14.0%</td>
<td>-17.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>-1.5%</td>
<td>-1.4%</td>
<td>-5.1%</td>
<td>-27.9%</td>
<td>-29.5%</td>
<td>-26.0%</td>
<td>-25.3%</td>
<td>-17.7%</td>
<td>-16.5%</td>
<td>-22.6%</td>
</tr>
<tr>
<td class="firstcol">Memo: Detail</td>
<td>1Mo%</td>
<td>1Mo%</td>
<td>1Mo%</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1- Date</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food
Drink&amp;tobacco</td>
<td>0.7%</td>
<td>1.3%</td>
<td>0.8%</td>
<td>12.1%</td>
<td>0.0%</td>
<td>-1.0%</td>
<td>-2.6%</td>
<td>-2.5%</td>
<td>-3.5%</td>
<td>11.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Textile&amp;Leather</td>
<td>-2.3%</td>
<td>-0.4%</td>
<td>-3.0%</td>
<td>-20.6%</td>
<td>-19.8%</td>
<td>-14.2%</td>
<td>-12.5%</td>
<td>-8.7%</td>
<td>-6.4%</td>
<td>-19.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Motor Vehicles
&amp; trailer</td>
<td>5.0%</td>
<td>-4.8%</td>
<td>-18.5%</td>
<td>-55.8%</td>
<td>-64.9%</td>
<td>-58.9%</td>
<td>-64.8%</td>
<td>-42.8%</td>
<td>-46.1%</td>
<td>-29.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mining and Quarry</td>
<td>-2.4%</td>
<td>-1.3%</td>
<td>-3.3%</td>
<td>-24.8%</td>
<td>-18.1%</td>
<td>-24.7%</td>
<td>-10.0%</td>
<td>-10.7%</td>
<td>-8.5%</td>
<td>-23.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Electricity,
gas&amp;H2O</td>
<td>-2.8%</td>
<td>-3.3%</td>
<td>-0.2%</td>
<td>-22.8%</td>
<td>-12.0%</td>
<td>-12.3%</td>
<td>-9.7%</td>
<td>-9.2%</td>
<td>-6.0%</td>
<td>-26.8%</td>
</tr>
</tbody>
</table>
</body></html>

In the UK overall MFG output is flat in March. Despite the fall, the output of durable consumer goods is up in March and its trend shows a diminishing pace of decline. Consumer nondurable output is up for three months in a row and [...]

The UK Halts Its String Of MFG Output Declines

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512a.jpg" align="left" border="0">
Though higher oil prices raised the cost of petroleum imports
during March, the lift just slightly deepened the U.S. foreign trade
deficit and it remained near the lowest level since 1999. The deficit
of $27.6B deepened from the little revised February level of $26.1B.
Imports remained down by one-quarter from last March due to the U.S.
recession. Exports fell a lesser 17.4% y/y. Consensus expectations had
been for a March deficit of $29.1B.
Adjusted for price inflation the trade deficit in goods also
was roughly stable at $35.9B, the lowest since the 2001 recession. It
was down from $47.6B last March.
A modest rise in crude oil costs to an average of $41.36 per
barrel still left them more than 50% lower than last March. Petroleum
imports retraced all of the February decline, rising 17.8%, while the
12.4% m/m rise in volume terms left real oil imports up just modestly
from last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512b.jpg" align="right" border="0">
Measured in chained-2000 dollars nonoil imports fell a slight
0.9% (-22.0% y/y). Overall real non-auto consumer goods imports fell
12.5% y/y to their lowest level since early-2005. Imports of automotive
vehicles &amp; parts were down 48.3% y/y, while non-auto capital
goods imports fell 22.8% y/y to their lowest since 2004.
Services imports fell another 1.0%, about as they did in
February (-7.0% y/y), and are down for the seventh consecutive month.
The decline reflected yet another decline in travel imports (-9.7% y/y)
even as passenger fares dropped by 14.5% versus March of 2008.
Recessions abroad caused real exports of goods to reverse most
of the February increase, falling 1.8%. The decline left them down
14.2% y/y, nearly the lowest level since late-2005. The chained dollar
value of non-auto consumer goods exports reversed just some of the
February increase with a 3.7% decline (-3.9% y/y). Capital goods
exports were down a sharper 4.9% (-17.7% y/y) while real exports of
automobiles &amp; parts fell 4.1% (-39.3% y/y).
Nominal exports of services fell hard again. The 1.2% m/m
decline pulled them down by 6.8% y/y. Travel exports fell 15.5% y/y as
fewer foreign citizens came to the U.S. even as passenger fares fell
19.6%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090512c.jpg" align="left" border="0">
The U.S. trade deficit in goods with China deepened just
slightly to $15.6B but remained near the lowest level since early-2006.
Imports fell 5.5% y/y but U.S. exports fell a harder 12.3%. The trade
deficit with Japan also deepened slightly to $2.6B but it remained near
its shallowest since 1984. The U.S. recession drove down imports from
Japan by roughly one-half from one year ago while exports fell by
nearly one quarter.
The international trade data can be found in Haver's USECON
database. Detailed figures are available in the USINT
database.
The Supervisory Capital Assessment Program
is yesterday's speech by Fed Chairman Ben S. Bernanke and it can be
found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20090511a.htm">here.</a>
The Global Recession from the
Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0922.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/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</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">U.S. Trade Deficit</td>
<td>$27.6B</td>
<td>$26.1B</td>
<td>$57.4B (03/08)</td>
<td>$681.1</td>
<td>$700.3</td>
<td>$753.3</td>
</tr>
<tr>
<td class="firstcol">Exports - Goods &amp;
Services</td>
<td>-2.4%</td>
<td>1.5%</td>
<td>-17.4%</td>
<td>11.5%</td>
<td>13.0%</td>
<td>13.5%</td>
</tr>
<tr>
<td class="firstcol">Imports - Goods &amp;
Services</td>
<td>-1.0%</td>
<td>-5.1%</td>
<td>-27.0%</td>
<td>7.3</td>
<td>6.1%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>3.1%</td>
<td>-8.4%</td>
<td>-51.1%</td>
<td>37.0%</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>-1.7%</td>
<td>-5.4%</td>
<td>-25.0%</td>
<td>1.3%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>
</body></html>

Though higher oil prices raised the cost of petroleum imports during March, the lift just slightly deepened the U.S. foreign trade deficit and it remained near the lowest level since 1999. The deficit of $27.6B deepened from the [...]

U.S. Trade Deficit Remains Stableand Near Its Lowest Since 1999

U.S. Trade Deficit Remains Stable and Near Its Lowest Since 1999

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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250502B5.jpg

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: May 2009

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U.S. Retail Sales Decline For A Second Month

U.S. Retail Sales Decline For A Second Month

U.S. Small Business Optimism Recovers

U.S. Chain Store Sales Rise Further

Gasoline Prices Rise To Their Highest Since Early-November

The UK Halts Its String Of MFG Output Declines

U.S. Trade Deficit Remains Stableand Near Its Lowest Since 1999

U.S. Trade Deficit Remains Stable and Near Its Lowest Since 1999