Tom Moeller

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<a href="/comment/100615e_big.png" name="modal"><img class="large" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100615e.png"></a>Business must be improving if it takes longer to
take delivery from sellers. The Federal Reserve Bank of New York
reported that its June Empire State Factory Index of General
Business Conditions increased modestly to 19.57 after a sharp
May decline. Nevertheless, the June level suggests positive growth in
factory sector activity. The latest reading matched Consensus
expectations.
Shorter delivery times were the primary impetus
for the gain in the overall index. The rise in the delivery-time index
was to the highest level since 2004. Also rising modestly were the
orders &amp; shipments series though the gains failed to recoup
earlier declines. The employment index also gave back increases during
the prior two months but remained positive.
The figures are diffusion indexes. Since the
series' inception in 2001, there has been a 75% correlation between the
overall level and the three-month change in U.S. factory sector
production. Like the Philadelphia Fed Index of General Business
Conditions, the Empire State Business Conditions Index reflects answers
to independent survey questions; it is not a weighted combination of
the components. The series dates back only to 2001.
The prices paid index fell
to 27.16 and reversed all of the gains earlier this year. Since
inception there has been a 76% correlation between the index of prices
paid and the three-month change in the core intermediate materials
PPI.&nbsp;
The Empire State index of expected
business conditions in six months slipped m/m to its lowest
level since July of last year. Virtually all of the component series
again fell including capital expenditures and technology spending
They're both, however, well above the recession lows.
The Empire State Manufacturing Survey is a
monthly survey of manufacturers in New York State. Participants from
across the state in a variety of industries respond to a questionnaire
and report the change in indicators from the previous month. Each index
is seasonally adjusted. Respondents also state the likely direction of
these same indicators six months ahead. For more on the
Empire State Manufacturing Survey, including methodologies and the
latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The
Empire State data is available in Haver's SURVEYS database.
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<table cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">June
</th><th scope="col">May
</th><th scope="col">April
</th><th scope="col">June
'09&nbsp;
</th><th scope="col">2009
</th><th scope="col">2008
</th><th scope="col">2007
</th></tr></thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index,%)</td>
<td>19.57</td>
<td>19.11</td>
<td>31.86</td>
<td>-9.51</td>
<td>-2.76</td>
<td>-9.97</td>
<td>17.22</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>17.53</td>
<td>14.30</td>
<td>29.49</td>
<td>-7.58</td>
<td>-2.52</td>
<td>-6.22</td>
<td>15.70</td>
</tr>
<tr>
<td class="firstcol">Inventories</td>
<td>-1.23</td>
<td>1.32</td>
<td>11.39</td>
<td>-25.29</td>
<td>-22.89</td>
<td>-7.87</td>
<td>-3.95</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>12.35</td>
<td>22.37</td>
<td>20.25</td>
<td>-21.84</td>
<td>-17.28</td>
<td>-5.36</td>
<td>11.28</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>27.16</td>
<td>44.74</td>
<td>41.77</td>
<td>-5.75</td>
<td>1.33</td>
<td>46.99</td>
<td>35.64</td>
</tr>
</tbody>
</table>

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Business must be improving if it takes longer to take delivery from sellers. The Federal Reserve Bank of New York reported that its June Empire State Factory Index of General Business Conditions increased modestly to 19.57 after a [...]

Empire State Business Conditions Improve As Delivery Times Lengthen

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<a href="/comment/100615a_big.png" name="modal"><img class="large" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100615a.png"></a>U.S. import prices in May posted their second
monthly decline this year with lower energy prices. The Bureau of Labor
Statistics indicated that, overall, import prices fell 0.6% last month
but the decline was short of Consensus expectations for a 1.3% drop.
Excluding petroleum, import prices rose 0.5%, the same as the upwardly
revised April increase. During the last twelve months, energy prices
increased by roughly one-third and non-oil import prices rose an
elevated 3.7%.

Petroleum prices fell 5.0% last month and more-than reversed the prior
month's increase. Nevertheless, energy prices have risen 4.0% this year
following last year's 78.6% increase from December-to-December.
Yesterday, Brent crude oil prices rose to $75.15 per barrel, their
highest since mid-May.

Non-oil import prices prices continued to reflect the dollar's earlier
weakness as well as the firmer U.S. economy. Prices rose 0.5% in May
following an upwardly revised 0.5% April increase. As a result, prices
rose at a 3.5% annual rate since December and reversed last year's 4.1%
decline. (During the last ten years, there has been a negative 81%
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.)&nbsp;
<a href="/comment/100615b_big.png" name="modal"><img class="large" align="right" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100615b.png"></a>
Stronger food &amp; beverage prices continued to provide lift to
overall import prices this year with a 1.5% May increase, 12.8% (AR)
gain YTD. That compares to a 2.8% decline during 2009. Prices for
nonauto consumer goods also have turned and risen at a still-modest
0.7% rate this year after a 0.3% decline last year.
Appliance prices
have strengthened at a 5.3% rate after last year's more modest
increase. Apparel prices have risen at a 0.5% annual rate after no
change last year. Imported auto prices fell at a 1.1% rate YTD after a
0.4% uptick last year.
&nbsp;Capital goods slipped 0.5% YTD and
excluding computers also slipped 0.4% YTD following a 0.7% gain last
year.
Total export prices continued firm with a 0.7%
increase last month after a 1.2% April gain. The rise reflected a 0.6%
gain (8.2% YTD) in non-agricultural export prices and a 1.4% jump in
agricultural goods prices (0.3% YTD).
The import and
export price series can be found in Haver's USECON database.
Detailed figures are available in the USINT
database.
The Global Recovery and Monetary
Policy is this morning's speech by St. Louis Fed
President James Bullard and it can be found <a href="http://www.stlouisfed.org/newsroom/speeches/pdf/2010-06-15.pdf">here</a>.

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<colgroup><col><col><col><col><col><col><col><col></colgroup>

<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">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>

</tr><tbody>
<tr>
<td class="firstcol">Import - All Commodities</td>
<td>-0.6</td>
<td>1.1</td>
<td>0.4</td>
<td>8.6</td>
<td>-11.5</td>
<td>11.5</td>
<td>4.2</td>
</tr>
<tr>
<td class="firstcol">Petroleum</td>
<td>-5.0</td>
<td>3.7</td>
<td>2.5</td>
<td>35.9</td>
<td>-35.9</td>
<td>37.7</td>
<td>11.6</td>
</tr>
<tr>
<td class="firstcol">Nonpetroleum</td>
<td>0.5</td>
<td>0.5</td>
<td>-0.1</td>
<td>3.7</td>
<td>-4.1</td>
<td>5.3</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.7</td>
<td>1.2</td>
<td>0.7</td>
<td>5.8</td>
<td>-4.6</td>
<td>6.0</td>
<td>4.9</td>
</tr>
</tbody>

</html>

U.S. import prices in May posted their second monthly decline this year with lower energy prices. The Bureau of Labor Statistics indicated that, overall, import prices fell 0.6% last month but the decline was short of Consensus [...]

U.S. Import Prices Fall With Lower Oil Costs

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<a href="/comment/100614c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614c.png"></a>
<a href="/comment/100614d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614d.png"></a>
 Population growth in the United States has been declining steadily since the early-1990s. Specifically, growth of 1.0% during the last nine years is off from the early-1990s' high of 1.4% and is well below the 1.5%-2.5% growth rates from the mid-1940s to the mid-1960s. Analyzing all of the reasons for the slowdown is beyond the scope of this presentation, yet one thing is clear. The Southern and Western states have seen accelerated growth at the expense of most other sections of the country. 

Suffering the greatest decline has been population growth in the country's extreme Northeast. Maine actually experienced net out-migration last year. Chronically slow population growth also characterizes the Northeast and the Midwestern regions with relatively high housing costs and the falloff in factory sector output as a percent of the economy. Michigan also experienced net outmigration during the last four years.

Net-population advances characterizes states in most other regions of the country. During the last five years the strongest growth rates have been in Wyoming, Texas, North Carolina and Colorado. Relatively low housing costs, an aging population as well as an increased ability to communicate electronically has aided population growth in these states. California, however, has seen population growth decelerate sharply with high unemployment and high home-foreclosures. 
The data used in the above analysis is available in Haver's USPOP database.

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<table cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Population
Growth (%)
</th><th scope="col">2009</th>
<th scope="col"2008</th>
<th scope="col"2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">United States</td>
<td>0.9</td>
<td>0.9</td>
<td>1.0</td>
<td>1.0</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Maine</td>
<td>-0.1</td>
<td>0.2</td>
<td>0.2</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol"> New
Hampshire</td>
<td>0.2</td>
<td>0.3</td>
<td>0.4</td>
<td>0.8</td>
</tr>
<tr>
<td class="firstcol">Vermont</td>
<td>0.1</td>
<td>0.1</td>
<td>0.1</td>
<td>0.2</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">New York</td>
<td>0.4</td>
<td>0.2</td>
<td>0.3</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">New
Jersey</td>
<td>0.5</td>
<td>0.3</td>
<td>0.1</td>
<td>0.0</td>
</tr>
<tr>
<td class="firstcol">Massachusetts</td>
<td>0.8</td>
<td>0.7</td>
<td>0.5</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">
Pennsylvania</td>
<td>0.3</td>
<td>0.4</td>
<td>0.4</td>
<td>0.4</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"> Louisiana</td>
<td>1.0</td>
<td>1.7</td>
<td>3.2</td>
<td>-5.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Virginia</td>
<td>1.1</td>
<td>1.0</td>
<td>1.0</td>
<td>1.1</td>
</tr>
<tr>
<td class="firstcol"> North
Carolina</td>
<td>1.5</td>
<td>2.0</td>
<td>2.2</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Georgia</td>
<td>1.4</td>
<td>1.7</td>
<td>2.2</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Florida</td>
<td>0.7</td>
<td>0.8</td>
<td>1.1</td>
<td>1.1</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"> Michigan</td>
<td>-0.3</td>
<td>-0.5</td>
<td>-0.3</td>
<td>-0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Illinois</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">Indiana</td>
<td>0.5</td>
<td>0.7</td>
<td>0.7</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol"> Minnesota</td>
<td>0.7</td>
<td>0.8</td>
<td>0.8</td>
<td>0.8</td>
</tr>
<tr>
<td class="firstcol">Ohio</td>
<td>0.1</td>
<td>0.1</td>
<td>0.3</td>
<td>0.2</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp; </td>
</tr>
<tr>
<td class="firstcol">Kansas</td>
<td>0.8</td>
<td>0.8</td>
<td>0.7</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Texas</td>
<td>2.0</td>
<td>2.0</td>
<td>2.0</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Arizona</td>
<td>1.5</td>
<td>2.2</td>
<td>2.8</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Colorado</td>
<td>1.8</td>
<td>1.9</td>
<td>1.9</td>
<td>2.0</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Wyoming</td>
<td>2.1</td>
<td>1.8</td>
<td>2.1</td>
<td>1.3</td>
</tr>
<tr class="odd">
<td class="firstcol">
California</td>
<td>1.0</td>
<td>1.0</td>
<td>0.7</td>
<td>0.5</td>
</tr>
<tr>
<td class="firstcol">
Washington</td>
<td>1.5</td>
<td>1.6</td>
<td>1.5</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Nevada</td>
<td>1.0</td>
<td>1.9</td>
<td>3.0</td>
<td>3.5</td>
</tr>
</tbody>
</table>

</html>

Population growth in the United States has been declining steadily since the early-1990s. Specifically, growth of 1.0% during the last nine years is off from the early-1990s' high of 1.4% and is well below the 1.5%-2.5% growth rates [...]

Moving Around The United States

Louise Curley

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<a href="/comment/100614b_big.png" name="modal"><img class="large" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614b.png"></a>
Industrial
production in most countries has shown improvement in the first few
months of this year.&nbsp; Today data for the first quarter for
Hong Kong and for April of this year for Japan and the entire Euro Area
were released.&nbsp; The data are shown in the attached
chart.&nbsp; For comparability, the original index for Hong Kong
based on 2008=100 was changed to 2005=100, the base of the other two
series, using the "advanced function" in DLX. In addition since the
data for Hong Kong are for the manufacturing sector only, we have used
data for the manufacturing data for Japan and the Euro Area instead of
their total industrial production figures that includes mining,
quarrying, electricity, gas and water supply and construction.&nbsp;
Of the two countries and the Euro Area,
manufacturing production in Japan was the first to decline and has
experienced the sharpest decline and recovery.&nbsp;&nbsp; In
April, manufacturing production in Japan was 95.9 (2005-100) 34.7%
above the low point of 71.2 in February, 2009.&nbsp; The comparable
figures for the Euro Area are 9.7% and 88.2 in May 2009.&nbsp; The
data for Hong Kong are quarterly, and therefore, somewhat less volatile
than the monthly figures.&nbsp; By the first quarter of this year,
manufacturing production in Hong Kong was 88.1 (2005=100) or 3.3% above
the low of 85.3 reached in the 3rd quarter of 2009.&nbsp;

<table cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">IP: Manufacturing (SA,
2005=100)
</th><th scope="col">Apr 10</th>
<th scope="col"Mar 10</th>
<th scope="col">Feb 10</th>
<th scope="col">Jan 10</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
</tr>
</thead>
<tr>
<td class="firstcol">Japan</td>
<td>95.9</td>
<td>94.7</td>
<td>93.6</td>
<td>94.2</td>
<td>90.3</td>
<td>88.0</td>
<td>85.8</td>
<td>84.4</td>
<td>82.9</td>
</tr>
<tr>
<td class="firstcol">Euro Area</td>
<td>96.6</td>
<td>96.1</td>
<td>94.3</td>
<td>93.6</td>
<td>91.8</td>
<td>91.5</td>
<td>90.1</td>
<td>90.1</td>
<td>89.1</td>
</tr>
<tr class="grey2">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Q1 10</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Q4 09</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Q3 09</td>
</tr>
<tr>
<td class="firstcol">Hong Kong</td>
<td>--</td>
<td>--</td>
<td>88.1</td>
<td>--</td>
<td>--</td>
<td>85.4</td>
<td>--</td>
<td>--</td>
<td>85.3</td>
</tr>

</table>

</html>

Industrial production in most countries has shown improvement in the first few months of this year. Today data for the first quarter for Hong Kong and for April of this year for Japan and the entire Euro Area were released. The data [...]

More Industrial Production Data: Japan, Hong Kong And The Euro Area

Robert Brusca

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Industrial output in the euro-area is still putting out some good
gains. This is despite the fact that the consumer goods sector
continues to lag and to decline. Overall EMU output rose by 0.6% m/m in
April after a gain of 1.8% in March and of 0.8% in February. The
strength is real. In April consumer goods output fell by 0.9% over
three-months, however, consumer goods output is up at just a 1%
annualized rate compared to a 13.5% pace for all of output. 
Capital goods output is growing at a accelerating
pace from 12-months to six months to three months. Intermediate goods
are not quite on such a clear acceleration but growth rates have been
high and steady with strong growth over three-months. Consumer goods
output has accelerated from 12-months to six months and has since been
subdued.
In the quarter to date -just one month into the
new quarter- output is growth sharply over the Q1 base. Output is up at
a 13% pace in Q2 lead by a rise at a 22% pace by intermediate goods and
a 15% pace by capital goods. The quarterly growth rate is held back by
consumer goods where output is shrinking at nearly a 1% annual rate. 
This is a familiar set of facts. We have been
talking about these trends in Europe for some time. The expansion seems
solid enough despite all the concerns. Mount enough concerns and they
can sink the healthiest of economies. But Europe is not there yet. It
still seems to be doing fine. The capital goods and intermediate goods
sectors are driving output ahead, but the lagging consumer goods sector
remains an impediment to getting into that next gear. 
Europe needs to more home grown demand. Europe
needs to get its consumer in gear. But growth is still quite solid and
is not showing any sign of decelerating and certainly none of
declining. With such a sharp drop in the euro in the background I think
investor worries about Europe are entirely in the wrong direction. 


<table cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<th scope="col" colspan=11>Euro-Area MFG IP</th>
</thead>
<tbody>

<tr class="even">
<td class="firstcol" >Saar
except m/m</td>
<td colspan=3>Mo/Mo</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">Euro-Area
Detail</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Feb 10</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>0.6%</td>
<td>1.8%</td>
<td>0.8%</td>
<td>13.5%</td>
<td>19.6%</td>
<td>15.0%</td>
<td>13.8%</td>
<td>9.1%</td>
<td>7.9%</td>
<td>13.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>-0.9%</td>
<td>1.2%</td>
<td>0.0%</td>
<td>1.0%</td>
<td>9.0%</td>
<td>6.4%</td>
<td>6.1%</td>
<td>2.9%</td>
<td>4.8%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">C-Durables</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>1.9%</td>
<td>11.4%</td>
<td>6.5%</td>
<td>7.0%</td>
<td>1.2%</td>
<td>1.3%</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">C-Non-durables</td>
<td>-1.2%</td>
<td>1.6%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>10.9%</td>
<td>6.3%</td>
<td>6.1%</td>
<td>3.0%</td>
<td>5.5%</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>2.2%</td>
<td>1.1%</td>
<td>1.2%</td>
<td>19.7%</td>
<td>12.2%</td>
<td>11.9%</td>
<td>9.1%</td>
<td>15.1%</td>
<td>14.3%</td>
<td>22.1%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>1.0%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>14.7%</td>
<td>6.8%</td>
<td>9.3%</td>
<td>5.9%</td>
<td>8.1%</td>
<td>5.2%</td>
<td>15.5%</td>
</tr>
<tr class="grey3">
<td colspan=11 class="firstcol">Main Euro-Area Countries and UK IP in
MFG</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan=3>Mo/Mo</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG
Only</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Feb 10</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q:4 Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>0.6%</td>
<td>3.9%</td>
<td>0.0%</td>
<td>19.2%</td>
<td>19.3%</td>
<td>9.9%</td>
<td>4.6%</td>
<td>14.1%</td>
<td>10.2%</td>
<td>20.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">France: IPxConstruct'n</td>
<td>-0.3%</td>
<td>1.3%</td>
<td>0.1%</td>
<td>4.5%</td>
<td>10.7%</td>
<td>6.4%</td>
<td>6.9%</td>
<td>7.9%</td>
<td>7.1%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">
Italy</td>
<td>1.2%</td>
<td>0.1%</td>
<td>0.5%</td>
<td>7.2%</td>
<td>9.3%</td>
<td>7.0%</td>
<td>6.3%</td>
<td>8.1%</td>
<td>7.4%</td>
<td>8.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>-1.5%</td>
<td>5.4%</td>
<td>1.6%</td>
<td>24.0%</td>
<td>14.8%</td>
<td>2.4%</td>
<td>4.6%</td>
<td>2.8%</td>
<td>5.0%</td>
<td>16.1%</td>
</tr>
<tr>
<td class="firstcol">UK:
EU member</td>
<td>-0.3%</td>
<td>2.2%</td>
<td>1.6%</td>
<td>14.7%</td>
<td>10.2%</td>
<td>7.4%</td>
<td>8.1%</td>
<td>3.5%</td>
<td>3.7%</td>
<td>10.4%</td>
</tr>
</tbody>
</table>
</html>

Industrial output in the euro-area is still putting out some good gains. This is despite the fact that the consumer goods sector continues to lag and to decline. Overall EMU output rose by 0.6% m/m in April after a gain of 1.8% in [...]

Euro-Area IP On An Upswing, Except For Consumer Goods

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<a href="/comment/100614a_big.png" name="modal"><img class="large" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614a.png"></a>
Industrial output in the euro-area is still putting out some good
gains. This is despite the fact that the consumer goods sector
continues to lag and to decline. Overall EMU output rose by 0.6% m/m in
April after a gain of 1.8% in March and of 0.8% in February. The
strength is real. In April consumer goods output fell by 0.9% over
three-months, however, consumer goods output is up at just a 1%
annualized rate compared to a 13.5% pace for all of output. 
Capital goods output is growing at a accelerating
pace from 12-months to six months to three months. Intermediate goods
are not quite on such a clear acceleration but growth rates have been
high and steady with strong growth over three-months. Consumer goods
output has accelerated from 12-months to six months and has since been
subdued.
In the quarter to date -just one month into the
new quarter- output is growth sharply over the Q1 base. Output is up at
a 13% pace in Q2 lead by a rise at a 22% pace by intermediate goods and
a 15% pace by capital goods. The quarterly growth rate is held back by
consumer goods where output is shrinking at nearly a 1% annual rate. 
This is a familiar set of facts. We have been
talking about these trends in Europe for some time. The expansion seems
solid enough despite all the concerns. Mount enough concerns and they
can sink the healthiest of economies. But Europe is not there yet. It
still seems to be doing fine. The capital goods and intermediate goods
sectors are driving output ahead, but the lagging consumer goods sector
remains an impediment to getting into that next gear. 
Europe needs to more home grown demand. Europe
needs to get its consumer in gear. But growth is still quite solid and
is not showing any sign of decelerating and certainly none of
declining. With such a sharp drop in the euro in the background I think
investor worries about Europe are entirely in the wrong direction. 


<table cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<th scope="col" colspan=11>Euro-Area MFG IP</th>
</thead>
<tbody>

<tr class="even">
<td class="firstcol" >Saar
except m/m</td>
<td colspan=3>Mo/Mo</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">Euro-Area
Detail</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Feb 10</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>0.6%</td>
<td>1.8%</td>
<td>0.8%</td>
<td>13.5%</td>
<td>19.6%</td>
<td>15.0%</td>
<td>13.8%</td>
<td>9.1%</td>
<td>7.9%</td>
<td>13.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>-0.9%</td>
<td>1.2%</td>
<td>0.0%</td>
<td>1.0%</td>
<td>9.0%</td>
<td>6.4%</td>
<td>6.1%</td>
<td>2.9%</td>
<td>4.8%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">C-Durables</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>1.9%</td>
<td>11.4%</td>
<td>6.5%</td>
<td>7.0%</td>
<td>1.2%</td>
<td>1.3%</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">C-Non-durables</td>
<td>-1.2%</td>
<td>1.6%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>10.9%</td>
<td>6.3%</td>
<td>6.1%</td>
<td>3.0%</td>
<td>5.5%</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>2.2%</td>
<td>1.1%</td>
<td>1.2%</td>
<td>19.7%</td>
<td>12.2%</td>
<td>11.9%</td>
<td>9.1%</td>
<td>15.1%</td>
<td>14.3%</td>
<td>22.1%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>1.0%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>14.7%</td>
<td>6.8%</td>
<td>9.3%</td>
<td>5.9%</td>
<td>8.1%</td>
<td>5.2%</td>
<td>15.5%</td>
</tr>
<tr class="grey3">
<td colspan=11 class="firstcol">Main Euro-Area Countries and UK IP in
MFG</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan=3>Mo/Mo</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG
Only</td>
<td>Apr 10</td>
<td>Mar 10</td>
<td>Feb 10</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q:4 Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>0.6%</td>
<td>3.9%</td>
<td>0.0%</td>
<td>19.2%</td>
<td>19.3%</td>
<td>9.9%</td>
<td>4.6%</td>
<td>14.1%</td>
<td>10.2%</td>
<td>20.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">France: IPxConstruct'n</td>
<td>-0.3%</td>
<td>1.3%</td>
<td>0.1%</td>
<td>4.5%</td>
<td>10.7%</td>
<td>6.4%</td>
<td>6.9%</td>
<td>7.9%</td>
<td>7.1%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">
Italy</td>
<td>1.2%</td>
<td>0.1%</td>
<td>0.5%</td>
<td>7.2%</td>
<td>9.3%</td>
<td>7.0%</td>
<td>6.3%</td>
<td>8.1%</td>
<td>7.4%</td>
<td>8.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>-1.5%</td>
<td>5.4%</td>
<td>1.6%</td>
<td>24.0%</td>
<td>14.8%</td>
<td>2.4%</td>
<td>4.6%</td>
<td>2.8%</td>
<td>5.0%</td>
<td>16.1%</td>
</tr>
<tr>
<td class="firstcol">UK:
EU member</td>
<td>-0.3%</td>
<td>2.2%</td>
<td>1.6%</td>
<td>14.7%</td>
<td>10.2%</td>
<td>7.4%</td>
<td>8.1%</td>
<td>3.5%</td>
<td>3.7%</td>
<td>10.4%</td>
</tr>
</tbody>
</table>
More Industrial Production Data: Japan, Hong Kong
And The Euro Area 
by&nbsp;<a href="/comment/Curley.html">Louise Curley</a> June
14, 2010


<a href="/comment/100614b_big.png" name="modal"><img class="large" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614b.png"></a>
Industrial
production in most countries has shown improvement in the first few
months of this year.&nbsp; Today data for the first quarter for
Hong Kong and for April of this year for Japan and the entire Euro Area
were released.&nbsp; The data are shown in the attached
chart.&nbsp; For comparability, the original index for Hong Kong
based on 2008=100 was changed to 2005=100, the base of the other two
series, using the "advanced function" in DLX. In addition since the
data for Hong Kong are for the manufacturing sector only, we have used
data for the manufacturing data for Japan and the Euro Area instead of
their total industrial production figures that includes mining,
quarrying, electricity, gas and water supply and construction.&nbsp;
Of the two countries and the Euro Area,
manufacturing production in Japan was the first to decline and has
experienced the sharpest decline and recovery.&nbsp;&nbsp; In
April, manufacturing production in Japan was 95.9 (2005-100) 34.7%
above the low point of 71.2 in February, 2009.&nbsp; The comparable
figures for the Euro Area are 9.7% and 88.2 in May 2009.&nbsp; The
data for Hong Kong are quarterly, and therefore, somewhat less volatile
than the monthly figures.&nbsp; By the first quarter of this year,
manufacturing production in Hong Kong was 88.1 (2005=100) or 3.3% above
the low of 85.3 reached in the 3rd quarter of 2009.&nbsp;

<table cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">IP: Manufacturing (SA,
2005=100)
</th><th scope="col">Apr 10</th>
<th scope="col"Mar 10</th>
<th scope="col">Feb 10</th>
<th scope="col">Jan 10</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
</tr>
</thead>
<tr>
<td class="firstcol">Japan</td>
<td>95.9</td>
<td>94.7</td>
<td>93.6</td>
<td>94.2</td>
<td>90.3</td>
<td>88.0</td>
<td>85.8</td>
<td>84.4</td>
<td>82.9</td>
</tr>
<tr>
<td class="firstcol">Euro Area</td>
<td>96.6</td>
<td>96.1</td>
<td>94.3</td>
<td>93.6</td>
<td>91.8</td>
<td>91.5</td>
<td>90.1</td>
<td>90.1</td>
<td>89.1</td>
</tr>
<tr class="grey2">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Q1 10</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Q4 09</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Q3 09</td>
</tr>
<tr>
<td class="firstcol">Hong Kong</td>
<td>--</td>
<td>--</td>
<td>88.1</td>
<td>--</td>
<td>--</td>
<td>85.4</td>
<td>--</td>
<td>--</td>
<td>85.3</td>
</tr>

</table>
Moving Around The United
States 
by&nbsp;<a href="/comment/Moeller.html">Tom Moeller</a> June
14, 2010


<a href="/comment/100614c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614c.png"></a>
<a href="/comment/100614d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614d.png"></a>
 Population growth in the United States has been declining steadily since the early-1990s. Specifically, growth of 1.0% during the last nine years is off from the early-1990s' high of 1.4% and is well below the 1.5%-2.5% growth rates from the mid-1940s to the mid-1960s. Analyzing all of the reasons for the slowdown is beyond the scope of this presentation, yet one thing is clear. The Southern and Western states have seen accelerated growth at the expense of most other sections of the country. 

Suffering the greatest decline has been population growth in the country's extreme Northeast. Maine actually experienced net out-migration last year. Chronically slow population growth also characterizes the Northeast and the Midwestern regions with relatively high housing costs and the falloff in factory sector output as a percent of the economy. Michigan also experienced net outmigration during the last four years.

Net-population advances characterizes states in most other regions of the country. During the last five years the strongest growth rates have been in Wyoming, Texas, North Carolina and Colorado. Relatively low housing costs, an aging population as well as an increased ability to communicate electronically has aided population growth in these states. California, however, has seen population growth decelerate sharply with high unemployment and high home-foreclosures. 
The data used in the above analysis is available in Haver's USPOP database.

<a href="/comment/100614e_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614e.png"></a>
<a href="/comment/100614f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100614f.png"></a>
<table cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Population
Growth (%)
</th><th scope="col">2009</th>
<th scope="col"2008</th>
<th scope="col"2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">United States</td>
<td>0.9</td>
<td>0.9</td>
<td>1.0</td>
<td>1.0</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Maine</td>
<td>-0.1</td>
<td>0.2</td>
<td>0.2</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol"> New
Hampshire</td>
<td>0.2</td>
<td>0.3</td>
<td>0.4</td>
<td>0.8</td>
</tr>
<tr>
<td class="firstcol">Vermont</td>
<td>0.1</td>
<td>0.1</td>
<td>0.1</td>
<td>0.2</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">New York</td>
<td>0.4</td>
<td>0.2</td>
<td>0.3</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">New
Jersey</td>
<td>0.5</td>
<td>0.3</td>
<td>0.1</td>
<td>0.0</td>
</tr>
<tr>
<td class="firstcol">Massachusetts</td>
<td>0.8</td>
<td>0.7</td>
<td>0.5</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">
Pennsylvania</td>
<td>0.3</td>
<td>0.4</td>
<td>0.4</td>
<td>0.4</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"> Louisiana</td>
<td>1.0</td>
<td>1.7</td>
<td>3.2</td>
<td>-5.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Virginia</td>
<td>1.1</td>
<td>1.0</td>
<td>1.0</td>
<td>1.1</td>
</tr>
<tr>
<td class="firstcol"> North
Carolina</td>
<td>1.5</td>
<td>2.0</td>
<td>2.2</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Georgia</td>
<td>1.4</td>
<td>1.7</td>
<td>2.2</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Florida</td>
<td>0.7</td>
<td>0.8</td>
<td>1.1</td>
<td>1.1</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"> Michigan</td>
<td>-0.3</td>
<td>-0.5</td>
<td>-0.3</td>
<td>-0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Illinois</td>
<td>0.5</td>
<td>0.5</td>
<td>0.5</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">Indiana</td>
<td>0.5</td>
<td>0.7</td>
<td>0.7</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol"> Minnesota</td>
<td>0.7</td>
<td>0.8</td>
<td>0.8</td>
<td>0.8</td>
</tr>
<tr>
<td class="firstcol">Ohio</td>
<td>0.1</td>
<td>0.1</td>
<td>0.3</td>
<td>0.2</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp; </td>
</tr>
<tr>
<td class="firstcol">Kansas</td>
<td>0.8</td>
<td>0.8</td>
<td>0.7</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Texas</td>
<td>2.0</td>
<td>2.0</td>
<td>2.0</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Arizona</td>
<td>1.5</td>
<td>2.2</td>
<td>2.8</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Colorado</td>
<td>1.8</td>
<td>1.9</td>
<td>1.9</td>
<td>2.0</td>
</tr>
<tr class="even">
<td colspan=5>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Wyoming</td>
<td>2.1</td>
<td>1.8</td>
<td>2.1</td>
<td>1.3</td>
</tr>
<tr class="odd">
<td class="firstcol">
California</td>
<td>1.0</td>
<td>1.0</td>
<td>0.7</td>
<td>0.5</td>
</tr>
<tr>
<td class="firstcol">
Washington</td>
<td>1.5</td>
<td>1.6</td>
<td>1.5</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Nevada</td>
<td>1.0</td>
<td>1.9</td>
<td>3.0</td>
<td>3.5</td>
</tr>
</tbody>
</table>
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<a href="/comment/100611i_big.png" name="modal"><img class="large" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100611i.png"> </a> Business inventories indeed have started to
increase, but the rate of accumulation has been modest. April
inventories posted a 0.4% increase and it was the sixth gain in seven
months. The rise was enough to slow the y/y rate of decumulation to
2.8% from -14.3% last summer, but the value of inventories remained
down 12.5% from the 2008 peak. Moreover, the increases have not kept up
with the improvement in sales and the I/S ratio remained at its
historic low of 1.23.
 Retail inventories have started to rise and the
0.2% April uptick was the fifth modest increase following sharp
declines during 2008 &amp; 2009. Nevertheless, the level of
inventories remained 13.6% below the 2008 peak. Accumulation this year
owes to modest gains in the auto sector. Less autos, accumulation began
only in March and it's been slight. Year-to-year inventories still are
down 1.3% versus the peak decumulation rate of 7.7% last fall. The
slowdown has been led by furniture &amp; general merchandise stores
while the decline in apparel store inventories has finally abated to
-6.7% y/y.

Inventory accumulation in the factory sector compares with sharp
decumulation through most of 2009. It has been accompanied by higher
wholesale inventories, but here the improvement has been raised by
higher oil prices. Less oil, wholesale inventories have been virtually
flat for all of this year (-5.7% y/y).
 The
business sales and inventory data are available in Haver's USECON
database.
<a href="/comment/100611j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100611j.png"></a>
<a href="/comment/100611k_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100611k.png"></a>

<table cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Business Inventories(%)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April y/y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr></thead><tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4</td>
<td>0.7</td>
<td>0.6</td>
<td>-2.8</td>
<td>-9.8</td>
<td>0.8</td>
<td>4.0</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>0.2</td>
<td>0.9</td>
<td>0.2</td>
<td>-3.8</td>
<td>-10.4</td>
<td>-3.3</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">
Retail excl. Auto</td>
<td>0.4</td>
<td>1.1</td>
<td>-0.1</td>
<td>-1.3</td>
<td>-4.9</td>
<td>-1.9</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol"> Wholesale</td>
<td>0.4</td>
<td>0.7</td>
<td>0.6</td>
<td>-3.2</td>
<td>-10.5</td>
<td>3.7</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>0.5</td>
<td>0.5</td>
<td>1.0</td>
<td>-1.6</td>
<td>-8.7</td>
<td>2.2</td>
<td>3.7</td>
</tr>
</tbody>
</table>

</body></html>

Business inventories indeed have started to increase, but the rate of accumulation has been modest. April inventories posted a 0.4% increase and it was the sixth gain in seven months. The rise was enough to slow the y/y rate of [...]

U.S. Business Inventories Again Rise Moderately

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.

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.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

250501Z6.jpg

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

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Charts of the Week: Tariff Truce, Tenuous Trust

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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.

250501H20.jpg

250501I20.jpg

- 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: June 2010

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Empire State Business Conditions Improve As Delivery Times Lengthen

U.S. Import Prices Fall With Lower Oil Costs

U.S. Import Prices Fall With Lower Oil Costs

Moving Around The United States

More Industrial Production Data: Japan, Hong Kong And The Euro Area

Euro-Area IP On An Upswing, Except For Consumer Goods

Euro-Area IP On An Upswing, Except For Consumer Goods

U.S. Business Inventories Again Rise Moderately