Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100401i.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>In terms of its broad trends German retail sales are beginning
to do a bit better. The three-month rate of growth is better than the
six-month rate of growth which exceeds the twelve month rate of growth.
So the sequential growth rates for German nominal sales are turning
higher.</p>
<p>Still January and February are not very strong months for
German consumers. Retail sales ex autos were flat in February and off
by 0.4% in January. Inflation-adjusted sales are off for two months
running. The sequential growth rates for Real ex-auto retail sales are
not as bright as for nominal sales either. Still they are not bad
registering acceleration for 12-months to six months and growth over
three months even if a bit slower than it was over six months. But at
this rate we&#8217;ll have to see if the trend holds up.</p>
<p>In the quarter-to-date German retail sales are falling for all
but two categories. Food beverage and tobacco sales are up in the
quarter-to-date and car registrations are flat. Still nominal retail
sales are falling at 0.2% annual rate and real ex auto retail sales are
falling at a 1.6% pace.</p>
<p>As Europe&#8217;s biggest economy Germans are doing very little to
provide the domestic demand to boost the euro-zone into recovery.
Instead Germany&#8217;s tactic is to sit back and let its export growth
benefit from increases in domestic demand elsewhere and let that pull
Germany into an export-led recovery. It&#8217;s not a very leading role for
Europe&#8217;s largest economy and it goes a long way to explain why Europe
simply lacks economic dynamism.<b></b></p>
</span>

<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr><th colspan="9" scope="col">German Real and Nominal Retail Sales </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAgo</td>
<td>QTR<br>
Saar</td>
</tr>
<tr>
<td class="firstcol">Retaill Ex auto</td>
<td>0.0%</td>
<td style="color: red;">-0.4%</td>
<td>1.1%</td>
<td>2.9%</td>
<td>1.0%</td>
<td style="color: red;">-0.5%</td>
<td>-3.5%</td>
<td style="color: red;">-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">MV and Parts</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">-0.5%</td>
<td>1.0%</td>
<td>0.4%</td>
<td>0.8%</td>
<td style="color: red;">-0.9%</td>
<td>-3.3%</td>
<td style="color: red;">-1.6%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp;
Tobacco</td>
<td style="color: red;">-2.3%</td>
<td>0.0%</td>
<td>2.2%</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">-7.1%</td>
<td>0.0%</td>
<td>-2.5%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing footwear</td>
<td>1.6%</td>
<td style="color: red;">-3.1%</td>
<td>5.3%</td>
<td>15.1%</td>
<td>10.3%</td>
<td style="color: red;">-1.2%</td>
<td>-4.5%</td>
<td>-11.4%</td>
</tr>
<tr>
<td class="firstcol">car registrations
(units)</td>
<td>1.8%</td>
<td>2.7%</td>
<td style="color: red;">-16.7%</td>
<td style="color: red;">-42.6%</td>
<td style="color: red;">-43.3%</td>
<td style="color: red;">-29.9%</td>
<td>28.5%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">Real</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Retail
Ex auto</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">-0.5%</td>
<td>1.0%</td>
<td>0.4%</td>
<td>0.8%</td>
<td style="color: red;">-0.9%</td>
<td style="color: red;">-3.3%</td>
<td style="color: red;">-1.6%</td>
</tr>
</tbody>
</table>
</body></html>

In terms of its broad trends German retail sales are beginning to do a bit better. The three-month rate of growth is better than the six-month rate of growth which exceeds the twelve month rate of growth. So the sequential growth [...]

German Retail Sales Back-Track In February But Still Show An Uptrend Can It Last?

Tom Moeller

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100401e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Labor market improvement is continuing. Last week initial
claims for jobless insurance figure fell 6,000 to 439,000 which was the
lowest level since August 2008. The earlier week's level was revised up
slightly and the latest is down from the recession peak of 651,000
reached in March of 2009. Last week's level roughly matched Consensus
expectations for 440,000 new claims while the four-week moving average
of initial claims fell to another cycle-low 447,250.</p>
<p>In addition, continuing claims for unemployment insurance
during the latest week also fell to a cycle low and are down by
one-third since late-June. The overall decline is a function of the
improved job market but also reflects the exhaustion of 26 weeks of
unemployment benefits. Continuing claims provide an indication of
workers' ability to find employment. The four-week average of
continuing claims fell to a cycle low of 4.680 mil. This series dates
back to 1966.</p>
<p>Extended benefits for unemployment insurance dropped sharply
to another cycle low of 136,990. They were down by two-thirds from a
peak of 597,688 reached in November.Each state administers a separate
unemployment insurance program within guidelines established by Federal
law. Benefit amounts and the length of time benefits are received are
determined by state law. For example, in Michigan and New York, an
additional 73 weeks of benefits are available and in California, an
additional 79 weeks are available.</p>
<p>The insured unemployment rate held steady at 3.6% during the
prior week. The rate reached a high of 4.9% during May. During the last
ten years, there has been a 96% correlation between the level of the
insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.</p>
<p>The highest insured unemployment rates in the week ending
March 12 were in Alaska (7.2% percent), Oregon (6.1), Pennsylvania
(6.0), Wisconsin (5.9), Michigan (5.5), Nevada (5.5), North Carolina
(5.1) and Connecticut (5.0). The lowest insured unemployment rates were
in Virginia (2.0), Texas (2.3), Georgia (3.0), Florida (3.1), Wyoming
(3.5), Maryland (3.6), Ohio (3.7), New York (4.0) and Maine (4.3).
These data are not seasonally adjusted but the overall insured
unemployment rate is.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100401f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100401g.jpg" style="width: 312px; height: 265px;">&gt;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></b></th>
<th scope="col"><b>3/26/10</b></th>
<th scope="col"><b>3/19/10</b></th>
<th scope="col"><b>3/12/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>439</td>
<td>445</td>
<td>454</td>
<td>-32.6%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,662</td>
<td>4,668</td>
<td>-19.3%</td>
<td>5,809</td>
<td>3,340</td>
<td>2,549</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.6</td>
<td>3.6</td>
<td>4.3 (3/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

Labor market improvement is continuing. Last week initial claims for jobless insurance figure fell 6,000 to 439,000 which was the lowest level since August 2008. The earlier week's level was revised up slightly and the latest is down [...]

U.S. Initial Claims For Jobless Insurance Fall To Lowest Since 2008

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331h.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: right;" align="left"></p>
<p>The Mortgage Bankers Association reported that while
applications for refinancing were weak, purchase applications firmed
during March. Overall, applications rose 2.5% this month after a 10.8%
increase in February.</p>
<p>The gain likely has been fueled by an $8,000 Federal tax
credit which is due to expire April 30. For last week, applications to <i>purchase</i>
a home rose 8.8% in March but that followed declines during the prior
two months. During the last ten years there has been a 51% correlation
between the y/y change in purchase applications and the change in new
plus existing single family home sales. The correlation has lessened
recently. For mortgage<i> refinancings</i> applications
were unchanged in March but they still have trended higher since
mid-2009.</p>
<p>The effective fixed interest rate on conventional 15-year
mortgages held roughly steady at 4.59% last week. For the month,
overall rates have been near the six year low. For 30-year mortgages
the rate also were steady at 5.19%. Rates reached a high of 5.79% in
early-June. Interest rates on fixed 15-year and 30-year mortgages are
closely correlated (near-90%) with the rate on 10-year Treasury
securities. Rates on adjustable one-year mortgages rose slightly to
6.95% last week.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331i.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331j.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM%22" style="color: black;"><b>MBA Mortgage Applications
(SA, 3/16/90=100)</b></a></th>
<th scope="col"><b>03/26/10</b></th>
<th scope="col"><b>03/19/10</b></th>
<th scope="col"><b>03/12/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>602.8</td>
<td>595.0</td>
<td>620.9</td>
<td>-49.5%</td>
<td>736.4</td>
<td>642.9</td>
<td>652.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>243.0</td>
<td>227.5</td>
<td>221.5</td>
<td>-9.3</td>
<td>263.5</td>
<td>345.4</td>
<td>424.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,707.8</td>
<td>2,744.7</td>
<td>2,955.9</td>
<td>-59.0</td>
<td>3,509.2</td>
<td>2,394.1</td>
<td>1,997.9</td>
</tr>
<tr>
<td class="firstcol">15-Year Mortgage Effective
Interest Rate (%)</td>
<td>4.59</td>
<td>4.53</td>
<td>4.60</td>
<td>4.77 (03/09)</td>
<td>4.85</td>
<td>5.9</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body></html>

The Mortgage Bankers Association reported that while applications for refinancing were weak, purchase applications firmed during March. Overall, applications rose 2.5% this month after a 10.8% increase in February. The gain likely has [...]

U.S. Weekly Mortgage Applications Firmed In March

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331e.jpg" align="left" border="0" height="265" width="353"></p>
<p>In what probably is a voluntary trend, factory inventories are
accumulating. Manufacturers raised inventory levels by 0.5% last month
after a 0.3% gain during January. The increase was part of a trend that
has raised inventories by 0.6% during the last three months after an
8.7% drop during all of 2009. Much of that reversal reflects the upturn
in oil prices which has raised inventory values held at refineries by
40.9% y/y. Excluding oil, factory inventories nevertheless rose 0.3% in
February. A slight decline during the last three months contrasts with
a 10.3% rate of decumulation last year. Machinery inventories slipped
0.1% and by 1.5% during the last three months versus a 13.6% decline
last year. Electrical equipment inventories were roughly unchanged for
the month. Their 0.3% three-month decline reverses an 18.1% drop last
year. Similarly, inventories of computers &amp; electronic products
rose 0.6% and by 0.8% during the last three months after a 9.1% decline
in 2009.</p>
<p>Factory orders rose 0.6% last month and by 4.6% since November
after a 17.2% drop during 2009. However, the latest gain also was
increased by higher oil prices. Excluding oil (where orders equal
shipments), orders still were firm and rose 0.9% (7.0% y/y) after a
2.5% January increase. Orders for primary metals have been notably
strong and were up by one-third y/y. Machinery orders rose 5.1% last
month and their three-month change of 1.6% compares to a 25.0% drop
last year. Electrical equipment orders remain under some pressure but
the 3.0% decline since November is slower than a 19.2% drop during all
of last year. Orders for computers &amp; electronic products rose
1.4% during the last three months after a moderate 7.6% decline last
year.</p>
<p>Factory shipments slipped 0.1% last month after a modest
January gain. Nevertheless, the three-month gain of 2.3% follows a
15.2% drop last year. Higher oil prices played a role in the
turnaround. Yet excluding oil, shipments rose 2.2% over the last three
months after a 12.2% decline last year. Machinery shipments staged a
reversal of 1.4% since November after the 20.1% decline in 2009. Also,
a 0.4% three-month slip in shipments of electrical equipment compares
to an 18.5% drop last year. Primary metals shipments increased 2.3% in
February and by 10.8% since November with higher prices. Furniture
shipments rose a modest 1.1% since November after the 18.9% drop last
year.</p>
<p>The Manufacturers' Shipments, Inventories and Orders (MSIO)
data are available in Haver's <b>USECON</b> database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a>
(NAICS, %)</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.5</td>
<td>0.3</td>
<td>-0.2</td>
<td>-5.6</td>
<td>-8.7</td>
<td>2.2</td>
<td>3.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.6</td>
<td>0.2</td>
<td>-0.1</td>
<td>-5.9</td>
<td>-9.2</td>
<td>-0.5</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>0.6</td>
<td>2.5</td>
<td>1.5</td>
<td>10.5</td>
<td>-17.2</td>
<td>0.0</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.7</td>
<td>0.5</td>
<td>1.5</td>
<td>9.2</td>
<td>-15.8</td>
<td>3.0</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-0.1</td>
<td>0.7</td>
<td>1.8</td>
<td>6.1</td>
<td>-15.2</td>
<td>1.6</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.3</td>
<td>1.0</td>
<td>1.3</td>
<td>7.1</td>
<td>-15.3</td>
<td>3.5</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.5</td>
<td>0.2</td>
<td>-0.9</td>
<td>-6.5</td>
<td>-10.2</td>
<td>3.4</td>
<td>17.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>0.3</td>
<td>0.1</td>
<td>0.4</td>
<td>-3.6</td>
<td>-8.4</td>
<td>-1.4</td>
<td>8.2</td>
</tr>
</tbody>
</table>
</body></html>

In what probably is a voluntary trend, factory inventories are accumulating. Manufacturers raised inventory levels by 0.5% last month after a 0.3% gain during January. The increase was part of a trend that has raised inventories by [...]

U.S. Factory Inventories Continue To Accumulate

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>It is not so unusual for the rate of unemployment to rise
early in an expansion, but this expansion has been in train for a while
and the rise in the rate is a bit chilling. Taking some of the sting
out of this event may be the German rate which has already been
announced for March since that rate is moving lower. Still the February
result for the Zone is just the sort of backsliding the EU Commission
and the ECB do not want to see. Spain remains major problem.</p>
<p>What&#8217;s worse is that this figure is reports as the EMU
inflation rate has taken a turn for the worse and is up by 1.5% Yr/Yr.
Granted energy is the driving force there but given the ECB&#8217;s
hyper-sensitivity to inflation and its focus on the headline rate, that
inflation report was not good news.</p>
<p>Around the world a number of reports today showed some
backsliding ranging from a reported slip in consumer confidence in the
UK, poor wage data featuring sharply cut mid-year bonus payments in
Japan and weak housing and retail reports from Australia. This is not
enough to put at question the ongoing global recovery, but it is a bit
deflating at a time that we are looking at growth ever so closely and
trying to get a sustainable recovery going. Rising inflation, even if
from oil prices, makes the situation even worse since everyone uses
energy and faces this challenge.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"><b>Unemployment
Rate And Changes</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp; Rate</td>
<td style="font-weight: bold;" colspan="3">Level</td>
<td style="font-weight: bold;" colspan="3">Simple Changes</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">3-Mo</td>
<td style="font-weight: bold;">6-Mo</td>
<td style="font-weight: bold;">12-Mo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;EU-Urate</td>
<td>9.6</td>
<td>9.5</td>
<td>9.4</td>
<td>0.2</td>
<td>0.4</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;EMU-Urate</td>
<td>10.0</td>
<td>9.9</td>
<td>9.9</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;Unemployment rate and changes</td>
<td style="font-weight: bold;" colspan="3">M/M%</td>
<td style="font-weight: bold;" colspan="3">Changes (ar)</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;&nbsp; EU-U 000s</td>
<td>0.6%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>2.0%</td>
<td>4.3%</td>
<td>15.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;EMU-U 000s</td>
<td>0.4%</td>
<td>0.7%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>3.4%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;U-Rates</td>
<td style="font-weight: bold;" colspan="3">Level</td>
<td style="font-weight: bold;" colspan="3">Simple Changes</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;Germany</td>
<td>7.5</td>
<td>7.5</td>
<td>7.5</td>
<td>0</td>
<td>-0.1</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;France</td>
<td>10.1</td>
<td>10</td>
<td>10</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;Spain</td>
<td>19</td>
<td>18.9</td>
<td>18.9</td>
<td>0</td>
<td>0.3</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;USA</td>
<td>9.7</td>
<td>9.7</td>
<td>10</td>
<td>-0.3</td>
<td>0</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;Japan</td>
<td>4.9</td>
<td>4.9</td>
<td>5.2</td>
<td>-0.4</td>
<td>-0.5</td>
<td>0.5</td>
</tr>
</tbody>
</table>
</body></html>

It is not so unusual for the rate of unemployment to rise early in an expansion, but this expansion has been in train for a while and the rise in the rate is a bit chilling. Taking some of the sting out of this event may be the German [...]

EU: Growth So Slow, You’d Hardly Know…

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<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331a.jpg" align="left" border="0" height="265" width="353">
The rate of job loss has been slowing for a year, but a turn
to positive territory isn't yet at hand. The latest report from the
payroll processor ADP, in their National Employment Report, indicated
that February private nonfarm payroll levels declined 23,000 following
a revised 24,000 decline during January. The decline compared to the
Consensus expectation for a gain of 40,000 jobs. The latest reading was
the twenty-sixth consecutive monthly decline but it was the smallest of
the period. Earlier data were revised. /p&gt;
</p><p>ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.</p>
<p>The U.S. Bureau of Labor Statistics will report February
payroll employment this Friday. For
comparison, the January decline of 24,000 in ADP's measure of private
nonfarm payrolls was accompanied by a similar loss of 18,000 jobs in
the BLS measure of private sector payrolls.</p>
According to ADP and Macro-Advisers, the
correlation between the monthly percentage change in the ADP estimate
and that in the BLS data is 0.90.
<p>ADP reported that private service-producing industry
employment rose for the second consecutive month with a gain of 28,000
(-1.3% y/y). Small-sized payrolls grew 15,000 (-0.9% y/y) while
medium-sized payrolls grew 10,000 (-1.4% y/y). These increases were
accompanied by a 3,000 increase (-1.9% y/y) in large service producing
payrolls.</p>
<p>In the goods producing sector employment fell another 51,000
during February (-8.7% y/y) but the three-month annual rate of change
eased again to -3.9% versus -18.1% one year ago. Small-sized payrolls
fell 27,000 (-9.4% y/y) while medium-sized payrolls fell 14,000 (-7.9%
y/y). Large payrolls fell 10,000 (-9.2% y/y). In the manufacturing
sector alone, payrolls fell 9,000 (-6.5% y/y). The three-month change
moderated to -1.1% from -17.5% last March.</p>

<p>The ADP National Employment Report data is maintained in
Haver's <b>USECON</b>database;
historical figures date back to December 2000. The figures in this
report cover only private sector jobs and exclude employment in the
public sector.The full
ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_February_10.pdf">here</a>
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><strong><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">ADP
National Employment
Report</a></strong></th>
<th scope="col"><strong>February</strong></th>
<th scope="col"><strong>January</strong></th>
<th scope="col"><strong>December</strong></th>
<th scope="col">Y/Y</th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Nonfarm Private Payroll
Employment (m/m Chg., 000s)</td>
<td>-23</td>
<td>-24</td>
<td>-82</td>
<td>-2.6%</td>
<td>-4.9%</td>
<td>-0.7%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Small
Payroll (1-49)</td>
<td>-12</td>
<td>-19</td>
<td>-35</td>
<td>-2.1</td>
<td>-4.1</td>
<td>-0.1</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium
Payroll (50-499)</td>
<td>-4</td>
<td>6</td>
<td>-20</td>
<td>-2.7</td>
<td>-5.7</td>
<td>-0.9</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large
Payroll (&gt;500)</td>
<td>-7</td>
<td>-11</td>
<td>-27</td>
<td>-3.5</td>
<td>-5.6</td>
<td>-1.8</td>
<td>-0.2</td>
</tr>
</tbody>
</table>
</span>
</body></html>

The rate of job loss has been slowing for a year, but a turn to positive territory isn't yet at hand. The latest report from the payroll processor ADP, in their National Employment Report, indicated that February private nonfarm [...]

ADP Report: Private Sector Job Loss Disappoints Expectations

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<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331a.jpg" align="left" border="0" height="265" width="353">
The rate of job loss has been slowing for a year, but a turn
to positive territory isn't yet at hand. The latest report from the
payroll processor ADP, in their National Employment Report, indicated
that February private nonfarm payroll levels declined 23,000 following
a revised 24,000 decline during January. The decline compared to the
Consensus expectation for a gain of 40,000 jobs. The latest reading was
the twenty-sixth consecutive monthly decline but it was the smallest of
the period. Earlier data were revised. /p&gt;
</p>
<p>ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.</p>
<p>The U.S. Bureau of Labor Statistics will report February
payroll employment this Friday. For
comparison, the January decline of 24,000 in ADP's measure of private
nonfarm payrolls was accompanied by a similar loss of 18,000 jobs in
the BLS measure of private sector payrolls.</p>
According to ADP and Macro-Advisers, the
correlation between the monthly percentage change in the ADP estimate
and that in the BLS data is 0.90.
<p>ADP reported that private service-producing industry
employment rose for the second consecutive month with a gain of 28,000
(-1.3% y/y). Small-sized payrolls grew 15,000 (-0.9% y/y) while
medium-sized payrolls grew 10,000 (-1.4% y/y). These increases were
accompanied by a 3,000 increase (-1.9% y/y) in large service producing
payrolls.</p>
<p>In the goods producing sector employment fell another 51,000
during February (-8.7% y/y) but the three-month annual rate of change
eased again to -3.9% versus -18.1% one year ago. Small-sized payrolls
fell 27,000 (-9.4% y/y) while medium-sized payrolls fell 14,000 (-7.9%
y/y). Large payrolls fell 10,000 (-9.2% y/y). In the manufacturing
sector alone, payrolls fell 9,000 (-6.5% y/y). The three-month change
moderated to -1.1% from -17.5% last March.</p>
<p>The ADP National Employment Report data is maintained in
Haver's <b>USECON</b>database;
historical figures date back to December 2000. The figures in this
report cover only private sector jobs and exclude employment in the
public sector.The full
ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_February_10.pdf">here</a>
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><strong><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">ADP
National Employment
Report</a></strong></th>
<th scope="col"><strong>February</strong></th>
<th scope="col"><strong>January</strong></th>
<th scope="col"><strong>December</strong></th>
<th scope="col">Y/Y</th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Nonfarm Private Payroll
Employment (m/m Chg., 000s)</td>
<td>-23</td>
<td>-24</td>
<td>-82</td>
<td>-2.6%</td>
<td>-4.9%</td>
<td>-0.7%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Small
Payroll (1-49)</td>
<td>-12</td>
<td>-19</td>
<td>-35</td>
<td>-2.1</td>
<td>-4.1</td>
<td>-0.1</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium
Payroll (50-499)</td>
<td>-4</td>
<td>6</td>
<td>-20</td>
<td>-2.7</td>
<td>-5.7</td>
<td>-0.9</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large
Payroll (&gt;500)</td>
<td>-7</td>
<td>-11</td>
<td>-27</td>
<td>-3.5</td>
<td>-5.6</td>
<td>-1.8</td>
<td>-0.2</td>
</tr>
</tbody>
</table>
</span>
<span id="articletitle">EU: Growth So Slow, You&#8217;d Hardly
Know&#8230;</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> March 31, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>It is not so unusual for the rate of unemployment to rise
early in an expansion, but this expansion has been in train for a while
and the rise in the rate is a bit chilling. Taking some of the sting
out of this event may be the German rate which has already been
announced for March since that rate is moving lower. Still the February
result for the Zone is just the sort of backsliding the EU Commission
and the ECB do not want to see. Spain remains major problem.</p>
<p>What&#8217;s worse is that this figure is reports as the EMU
inflation rate has taken a turn for the worse and is up by 1.5% Yr/Yr.
Granted energy is the driving force there but given the ECB&#8217;s
hyper-sensitivity to inflation and its focus on the headline rate, that
inflation report was not good news.</p>
<p>Around the world a number of reports today showed some
backsliding ranging from a reported slip in consumer confidence in the
UK, poor wage data featuring sharply cut mid-year bonus payments in
Japan and weak housing and retail reports from Australia. This is not
enough to put at question the ongoing global recovery, but it is a bit
deflating at a time that we are looking at growth ever so closely and
trying to get a sustainable recovery going. Rising inflation, even if
from oil prices, makes the situation even worse since everyone uses
energy and faces this challenge.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"><b>Unemployment
Rate And Changes</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp; Rate</td>
<td style="font-weight: bold;" colspan="3">Level</td>
<td style="font-weight: bold;" colspan="3">Simple
Changes</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">3-Mo</td>
<td style="font-weight: bold;">6-Mo</td>
<td style="font-weight: bold;">12-Mo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;EU-Urate</td>
<td>9.6</td>
<td>9.5</td>
<td>9.4</td>
<td>0.2</td>
<td>0.4</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;EMU-Urate</td>
<td>10.0</td>
<td>9.9</td>
<td>9.9</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;Unemployment rate and changes</td>
<td style="font-weight: bold;" colspan="3">M/M%</td>
<td style="font-weight: bold;" colspan="3">Changes
(ar)</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;&nbsp; EU-U 000s</td>
<td>0.6%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>2.0%</td>
<td>4.3%</td>
<td>15.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;EMU-U 000s</td>
<td>0.4%</td>
<td>0.7%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>3.4%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;U-Rates</td>
<td style="font-weight: bold;" colspan="3">Level</td>
<td style="font-weight: bold;" colspan="3">Simple
Changes</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;Germany</td>
<td>7.5</td>
<td>7.5</td>
<td>7.5</td>
<td>0</td>
<td>-0.1</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;France</td>
<td>10.1</td>
<td>10</td>
<td>10</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;Spain</td>
<td>19</td>
<td>18.9</td>
<td>18.9</td>
<td>0</td>
<td>0.3</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;USA</td>
<td>9.7</td>
<td>9.7</td>
<td>10</td>
<td>-0.3</td>
<td>0</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp;Japan</td>
<td>4.9</td>
<td>4.9</td>
<td>5.2</td>
<td>-0.4</td>
<td>-0.5</td>
<td>0.5</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Factory Inventories Continue
To Accumulate</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> March 31, 2010</span>
<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331e.jpg" align="left" border="0" height="265" width="353"></p>
<p>In what probably is a voluntary trend, factory inventories are
accumulating. Manufacturers raised inventory levels by 0.5% last month
after a 0.3% gain during January. The increase was part of a trend that
has raised inventories by 0.6% during the last three months after an
8.7% drop during all of 2009. Much of that reversal reflects the upturn
in oil prices which has raised inventory values held at refineries by
40.9% y/y. Excluding oil, factory inventories nevertheless rose 0.3% in
February. A slight decline during the last three months contrasts with
a 10.3% rate of decumulation last year. Machinery inventories slipped
0.1% and by 1.5% during the last three months versus a 13.6% decline
last year. Electrical equipment inventories were roughly unchanged for
the month. Their 0.3% three-month decline reverses an 18.1% drop last
year. Similarly, inventories of computers &amp; electronic products
rose 0.6% and by 0.8% during the last three months after a 9.1% decline
in 2009.</p>
<p>Factory orders rose 0.6% last month and by 4.6% since November
after a 17.2% drop during 2009. However, the latest gain also was
increased by higher oil prices. Excluding oil (where orders equal
shipments), orders still were firm and rose 0.9% (7.0% y/y) after a
2.5% January increase. Orders for primary metals have been notably
strong and were up by one-third y/y. Machinery orders rose 5.1% last
month and their three-month change of 1.6% compares to a 25.0% drop
last year. Electrical equipment orders remain under some pressure but
the 3.0% decline since November is slower than a 19.2% drop during all
of last year. Orders for computers &amp; electronic products rose
1.4% during the last three months after a moderate 7.6% decline last
year.</p>
<p>Factory shipments slipped 0.1% last month after a modest
January gain. Nevertheless, the three-month gain of 2.3% follows a
15.2% drop last year. Higher oil prices played a role in the
turnaround. Yet excluding oil, shipments rose 2.2% over the last three
months after a 12.2% decline last year. Machinery shipments staged a
reversal of 1.4% since November after the 20.1% decline in 2009. Also,
a 0.4% three-month slip in shipments of electrical equipment compares
to an 18.5% drop last year. Primary metals shipments increased 2.3% in
February and by 10.8% since November with higher prices. Furniture
shipments rose a modest 1.1% since November after the 18.9% drop last
year.</p>
<p>The Manufacturers' Shipments, Inventories and Orders (MSIO)
data are available in Haver's <b>USECON</b> database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory
Survey</a>
(NAICS, %)</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.5</td>
<td>0.3</td>
<td>-0.2</td>
<td>-5.6</td>
<td>-8.7</td>
<td>2.2</td>
<td>3.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.6</td>
<td>0.2</td>
<td>-0.1</td>
<td>-5.9</td>
<td>-9.2</td>
<td>-0.5</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>0.6</td>
<td>2.5</td>
<td>1.5</td>
<td>10.5</td>
<td>-17.2</td>
<td>0.0</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.7</td>
<td>0.5</td>
<td>1.5</td>
<td>9.2</td>
<td>-15.8</td>
<td>3.0</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-0.1</td>
<td>0.7</td>
<td>1.8</td>
<td>6.1</td>
<td>-15.2</td>
<td>1.6</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.3</td>
<td>1.0</td>
<td>1.3</td>
<td>7.1</td>
<td>-15.3</td>
<td>3.5</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.5</td>
<td>0.2</td>
<td>-0.9</td>
<td>-6.5</td>
<td>-10.2</td>
<td>3.4</td>
<td>17.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>0.3</td>
<td>0.1</td>
<td>0.4</td>
<td>-3.6</td>
<td>-8.4</td>
<td>-1.4</td>
<td>8.2</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Weekly Mortgage Applications
Firmed In March</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a>March 31, 2010 </span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331h.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: right;" align="left"></p>
<p>The Mortgage Bankers Association reported that while
applications for refinancing were weak, purchase applications firmed
during March. Overall, applications rose 2.5% this month after a 10.8%
increase in February.</p>
<p>The gain likely has been fueled by an $8,000 Federal tax
credit which is due to expire April 30. For last week, applications to <i>purchase</i>
a home rose 8.8% in March but that followed declines during the prior
two months. During the last ten years there has been a 51% correlation
between the y/y change in purchase applications and the change in new
plus existing single family home sales. The correlation has lessened
recently. For mortgage<i> refinancings</i> applications
were unchanged in March but they still have trended higher since
mid-2009.</p>
<p>The effective fixed interest rate on conventional 15-year
mortgages held roughly steady at 4.59% last week. For the month,
overall rates have been near the six year low. For 30-year mortgages
the rate also were steady at 5.19%. Rates reached a high of 5.79% in
early-June. Interest rates on fixed 15-year and 30-year mortgages are
closely correlated (near-90%) with the rate on 10-year Treasury
securities. Rates on adjustable one-year mortgages rose slightly to
6.95% last week.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331i.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100331j.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM%22" style="color: black;"><b>MBA Mortgage Applications
(SA, 3/16/90=100)</b></a></th>
<th scope="col"><b>03/26/10</b></th>
<th scope="col"><b>03/19/10</b></th>
<th scope="col"><b>03/12/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>602.8</td>
<td>595.0</td>
<td>620.9</td>
<td>-49.5%</td>
<td>736.4</td>
<td>642.9</td>
<td>652.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>243.0</td>
<td>227.5</td>
<td>221.5</td>
<td>-9.3</td>
<td>263.5</td>
<td>345.4</td>
<td>424.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,707.8</td>
<td>2,744.7</td>
<td>2,955.9</td>
<td>-59.0</td>
<td>3,509.2</td>
<td>2,394.1</td>
<td>1,997.9</td>
</tr>
<tr>
<td class="firstcol">15-Year Mortgage Effective
Interest Rate (%)</td>
<td>4.59</td>
<td>4.53</td>
<td>4.60</td>
<td>4.77 (03/09)</td>
<td>4.85</td>
<td>5.9</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body></html>

ADP Report: Private Sector JobLoss Disappoints Expectations

Louise Curley

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<br>

<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100330k.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: right;" align="left"></p>
<p>Portugal, one of those problem countries in the Euro Area
along with Ireland, Spain and Greece is beginning to show some slight
signs of an improving economy . The first chart shows the year to year
increases in Retail Trade and in Industrial Production. According to
data announced today, the year to year increase in industrial
production was 2.4% in February, compared with 2.6% in January. These
were the first positive year to year changes since September 2008.
Retail trade experienced its first positive year to year change since
October, 2008, in December of last year. Although negative, the year to
year changes since then have been small, -0.73% in January and -0.43%
in February.</p>
<p>Another indication that the economy is beginning to recover is
the rise, though modest, in prices. The year to year increase in the
Harmonized Consumer Price Index turned positive for the first time
since February 09 in January of this year and has continued to rise in
February, as can be seen in the second chart.</p>
<p>While these signs are encouraging, much remains to be done to
redress Portugal's growing government deficit and debt, which are
illustrated in the third chart.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100330l.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100330m.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col"><b>Feb 10&nbsp;</b></th>
<th scope="col"><b>Jan 10</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Previous Positive</b></th>
<th scope="col"><b>Date</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial
Production&nbsp;&nbsp;</td>
<td>2.42</td>
<td>2.56</td>
<td>-2.40</td>
<td>0.58</td>
<td>Sep 08</td>
</tr>
<tr>
<td class="firstcol">Value of Retail
Trade (Y/Y%</td>
<td>0.34</td>
<td>0.73</td>
<td>1.77</td>
<td>2.06</td>
<td>Oct 08</td>
</tr>
<tr class="odd">
<td class="firstcol">Harmonized
Consumer Price Index (Y/Y%)</td>
<td>0.18</td>
<td>0.09</td>
<td>-0.14</td>
<td>-0.07</td>
<td>Feb 09</td>
</tr>
</tbody>
</table>
</body></html>

Portugal, one of those problem countries in the Euro Area along with Ireland, Spain and Greece is beginning to show some slight signs of an improving economy . The first chart shows the year to year increases in Retail Trade and in [...]

Some Positive Economic News From Portugal

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

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Tian Yong Woon

In this week’s Letter, we cover the latest developments and implications of the Middle East conflict for Asia, while also making space for other important themes, including artificial intelligence (AI). The Middle East conflict remains in a no deal state coming out of the weekend, though some early Monday optimism emerged in Asian markets following Iran’s reported offer to reopen the Strait of Hormuz (chart 1). Nonetheless, as the Strait closure drags on, so too do the fiscal costs of domestic fossil fuel subsidies across Asia, which have been shown to move closely with crude oil prices (chart 2). While such measures offer direct relief by cushioning household energy costs, they remain difficult to sustain over the long haul.

Over the week, we also saw a further fraying in regional monetary policy trends, with the Philippines hiking its policy rate for the first time in about two years amid inflation concerns, while Indonesia stood pat on rates (chart 3). Investor attention is likely to remain fixed on monetary policy this week, with the Bank of Japan due to decide on policy. Expectations for an April hike have faded amid the persistent Middle East conflict, though yen weakness continues to present a source of concern (chart 4). The week also brings China’s latest PMI readings (chart 5), adding to the recent run of hard data accompanying the Q1 GDP release.

Beyond the Middle East conflict, the evolution of AI continues to demand close attention. Before geopolitical tensions took centre stage, AI was the dominant market narrative — and that enthusiasm has hardly faded. If anything, recent developments suggest the story is broadening: use cases are expanding, scalability is improving, and access is widening beyond large corporates to the mass market — increasingly spilling into the realm of physical AI. It may well be this persistent wave of optimism that is helping to underpin equity valuations, even as the geopolitical backdrop darkens (chart 6).

**The Middle East conflict**
About two months in, we remain stuck in the limbo of the US-Iran conflict, which has left the Strait of Hormuz largely closed and much of the world starved of the critical oil flows needed to power the global economy. The back and forth between the US and Iran has persisted in recent weeks, with both sides again failing to reach a peace deal over the weekend, though Monday’s news of Iran offering to reopen the Strait has revived some hope in markets. In truth, commodity and market valuations do not hinge so much on a peace deal itself, but rather on the resumption of oil flows through the Strait, something that could materialise even in the absence of a formal deal, though any agreement that includes and credibly delivers such a reopening would likely be warmly received by markets. Until then, market gyrations are likely to persist, with prices fluctuating in response to each new snippet of news. And until then, the world will continue both to be starved of, while gradually adapting to, the drip feed of oil flows emerging from the Strait.

260427T1.jpg

**The fiscal costs of the Middle East conflict**
As the Middle East conflict drags on, so too does the strain on fiscal resources across parts of Asia, as the costs of energy-related subsidy programmes continue to mount. While such programmes have an immediate, direct, and tangible impact in shielding households from surging energy costs, they are far from sustainable, particularly if oil prices remain well above targeted levels or stay elevated for an extended period. As chart 2 illustrates, the costs of these explicit subsidy programmes tend to rise closely with crude oil prices, as seen in India and Indonesia. Other measures adopted elsewhere, such as drawing down oil reserves, may be less fiscally costly, but are similarly difficult to sustain indefinitely. In both respects, the clock is ticking, and the world continues to hold its breath as the conflict drags on.

260427T2.jpg

**The latest central bank responses to the conflict**
Over the past week, Asia saw two central bank decisions. The Philippines’ (BSP) opted to deliver its first rate hike in about two years, while Indonesia’s (BI) chose to stand pat on policy rates and instead committed to stepped up FX intervention (chart 3). This latest round of decisions points to a further fraying of what had been a broad regional monetary policy consensus, namely that central banks would delay additional easing while maintaining a high bar for outright tightening. Domestic considerations, however, remain paramount. In the Philippines’ case, the central bank has moved to rein in inflation, which is already showing notable signs of price pass through stemming from disruptions linked to the Strait of Hormuz. That said, BSP is not the first in the region to buck the reluctance to tighten. Singapore’s central bank had already tightened policy in mid-April, albeit through its own distinct framework, given its use of the exchange rate rather than policy rates as the primary channel for monetary policy.

260427T3.jpg

**The week ahead**
Looking to the week ahead, a major central bank decision looms in Japan. Market expectations for the Bank of Japan to deliver a rate hike at its April meeting have ebbed amid the persistence of the Middle East conflict, to which Japan remains particularly vulnerable given its reliance on oil imports flowing through the Strait of Hormuz. At the same time, inflation in Japan has yet to become a major concern, with recent readings having picked up but not yet entering troubling territory. One potential source of concern, however, lies with the Japanese yen, which has remained on a weakening trend since early last year (chart 4). That depreciation has been one of the key arguments underpinning calls for further rate hikes.

260427T4.jpg

The week also brings China’s latest PMIs into focus. March saw a divergence between China’s official PMI readings, which improved, and the unofficial readings from RatingDog, which instead pulled back. Nonetheless, both official and unofficial gauges remained in expansionary territory (chart 5), with investors now watching closely to see whether that resilience can be sustained amid ongoing stresses from the Middle East, or whether offsetting drivers can continue to keep Chinese business sentiment and prospects buoyant.

260427T5.jpg

**Beyond the strait**
Moving beyond the Middle East conflict, a whole host of developments continue to unfold globally, many of which have in fact helped offset some of the pessimism wrought by the Strait’s chokehold. One such development is artificial intelligence (AI), which had dominated headlines before the outbreak of the conflict and continues to advance at breakneck pace. AI capabilities are still rapidly evolving, while practical applications, such as physical AI embodied in humanoid robots, are beginning to show broader and stronger use cases. Production of such robots is also becoming increasingly scalable and within reach not just for industrial complexes and healthcare, but for the mass market as well. It is perhaps growing optimism around these prospects that has helped keep equity valuations buoyant, even in the face of the festering conflict in the Middle East. Moreover, while concerns over AI-driven job displacement persist, new opportunities are emerging as well, particularly for AI adopters, with a growing share of job postings in Western economies increasingly referencing AI-related skills, as shown in chart 6.

260427T6.jpg

Asia

Economic Letter from Asia: Not Just About the Strait

260424E.jpg

The onset of the war in Iran appears to have hit the German economy extremely hard as the Ifo survey shows very substantial and broad-based decline across its survey in April. The Ifo survey features readings for five sectors as well as an aggregate reading, and it surveys them for climate, current conditions, and expectations. The decline in the Ifo survey is present for all three concepts and across all five sectors, marking the weakening in April as a highly significant and extremely disturbing development. Only manufacturing in the current conditions survey escapes a month-to-month decline.

**The Ifo sequences**: The **climate** reading fell both overall and across each of the five sectors. **Current conditions** declined for the overall and for four of the five sectors, with manufacturing the sole exception. **Expectations** declined for the overall and for all sectors. Several of the sector declines were for a very substantial magnitude, especially when compared to historic changes in these indexes.

**Monthly changes in readings—severe broad deterioration**
The month-to-month change in the climate reading has weakened more month-to-month 19% of the time. That overall result, however, is boosted by manufacturing where the monthly change has been weaker 35% of the time (on data back to 2011). However, all other sectors have seen climate weaker m/m only 2.3% to 6.3% of the time! The current situation readings weakened, with the headline weakening more m/m 11% of the time. This was boosted by manufacturing, the only sector that improved on the month; its ranking on change was in its 85th percentile—quite good and truly stand-alone good news. The other current changes by sector ranged from construction being weaker 1.7% of the time, to retailing that has been weaker about 30% of the time in terms of m/m changes. Expectation changes were uniformly terrible, with the headline drop weaker only 6.3% of the time and sector change month-to-month weaker between 9% and 1.7% of the time. The monthly weakening was uniform and substantial. I document it with these calculations, but you can also see it on the chart above.

**Climate**: The bottom line is that the all-sector index for climate fell to -20.3 in April from -18 in March, placing it at a 10.5 percentile standing on data since 1993. The sector ranking is the highest for construction with a 42.2 percentile standing and the weakness for services at a 1.1 percentile standing—weaker than the table reading nearly 99% of the time. In terms of percentile standing levels or monthly changes, conditions are closing in on grim.

**Current conditions**: Current conditions saw the all-sector index slip to -5.3 in April from -2.4 in March. The headline ranking stands at a 9.8 percentile mark, making it—like the climate reading—weaker than its current reading only about 10% of the time. The strongest reading under current conditions is for construction which has a 60.6 percentile standing; it is the only ranking in the table above its historic median. Manufacturing, the only sector in the survey that improved month-to-month, has a 22.5 percentile standing, while services record the weakest percentile standing under current conditions, at an 8.4 percentile standing.

**Expectations:** The all-sector index for expectations fell to -25.3 in April from -19.9 in March, placing it at a 6.3 percentile standing. The percentile standings across sectors range from a high of 9.5% for manufacturing to a low of 1.5% for retailing. Up until earlier this year, the Ifo was showing signs of improvement; however, all of that has simply collapsed in the last month. Weakness is across economic concepts and sectors, as documented above. For reference, the table also gives a separate set of rankings on where the various indexes stand since the invasion of Ukraine, since that was another marked event that drove the index, that had been improving after Covid, down to lower levels.  Ranked even on this reduced scale looking at conditions only since the invasion of Ukraine, when conditions have generally been weaker, the current rankings across the Ifo survey remained extremely weak. This is a very disturbing survey for the German economy.

260424.jpg

Germany

German Ifo Plunges Everywhere

Andrew Cates

**Energy shock lifts inflation, trims growth**
The IMF’s latest WEO revisions for 2026 broadly reflect the classic stagflationary impact of the recent Middle East energy shock, with growth downgraded and inflation revised higher across most major economies. Higher energy prices act as a tax on real incomes while simultaneously pushing up costs. That said, the picture is not uniform: a number of economies—notably the US, China and India—have seen growth upgrades, reflecting stronger-than-expected momentum so far in 2026. By contrast, the UK stands out at the stagflationary extreme, combining one of the largest growth downgrades with a relatively strong inflation uplift—consistent with its weaker underlying momentum, greater energy sensitivity and more persistent domestic inflation dynamics. More broadly, while the global revisions remain modest—pointing to resilience in activity—the message is that disinflation is no longer a smooth glide back to target but increasingly contingent on energy prices and geopolitical developments.

260423Z1.jpg

**Markets largely shrug off rising economic pessimism**
Notwithstanding a more downbeat assessment from economists—including the IMF’s stagflationary tilt to the outlook—there has been remarkably little follow-through into financial markets. Measures of systemic stress in both the US and UK remain low by historical standards, suggesting that investors are, for now, largely looking through the Middle East conflict. There are several possible explanations: corporate profits remain resilient, the AI-driven investment narrative continues to dominate market thinking, and markets may be assuming that any energy shock will be temporary and contained. In effect, investors appear to be pricing a benign baseline in which geopolitical risks do not materially disrupt growth, inflation expectations or policy. The UK is a partial exception, with a somewhat more visible uptick in stress, which aligns more closely with the IMF’s more challenging growth-inflation trade-off and the economy’s greater sensitivity to energy prices.

260423Z2.jpg

**Volatility falls despite deteriorating growth surprises**
Market optimism is also increasingly at odds with the incoming data flow. Typically, equity volatility declines when growth surprises are positive and inflation surprises are benign. However, the recent pattern has broken that relationship. Growth surprises across the G10 have turned increasingly negative (our series is inverted in the chart below), yet volatility has continued to fall. In other words, markets are becoming less sensitive to weakening macro data, continuing to price a benign outlook even as the data deteriorate. This divergence reinforces the broader theme: investors are, for now, looking through both geopolitical risks and softer economic momentum, placing greater weight on resilience in earnings, the AI-driven narrative and the assumption that policy will remain supportive.

260423Z3.jpg

**Inflation Nowcasts Have Jumped**
Incoming data suggest that headline inflation has moved higher in recent weeks, broadly in line with expectations given the rise in energy prices following the Middle East shock. Nowcasts for CPI across the major economies show a clear rebound in March and April from the lows seen at the start of 2026, with the move occurring in a relatively synchronised fashion. This reinforces the view that the recent pickup in inflation is being driven primarily by a common external factor—energy.

260423Z4.jpg

**Energy shock not yet feeding into underlying inflation**
However, the detailed breakdown of March inflation outcomes suggests that this remains, for now, a largely headline-driven phenomenon. While headline CPI prints were firm across most economies, core inflation—stripping out energy and food—was more subdued and in some cases weaker. This indicates that there has been very limited pass-through from higher energy prices into broader goods and services inflation at this early stage. In other words, the shock is still being absorbed rather than propagated. That distinction is critical for policy and markets alike: as long as second-round effects remain contained, central banks may be able to look through the near-term rise in inflation, even as headline rates move higher.

260423Z5.jpg

**Inflation Expectations Rising as Growth Sentiment Falters**
It remains early days, and much will hinge on how inflation expectations evolve from here. The latest ZEW survey for Germany already conveys the hallmarks of a classic stagflationary shock, with macroeconomic expectations weakening even as inflation expectations have ratcheted sharply higher. This shift is important: while the recent rise in headline inflation has so far shown limited pass-through into core, a sustained increase in expectations would raise the risk of second-round effects and make the inflation process more persistent. In that sense, the ZEW data highlight the key fault line in the current environment—whether the energy-driven shock remains contained, or begins to embed itself more broadly through expectations and pricing behaviour.

260423Z6.jpg

Financial markets have remained notably calm in recent weeks despite rising geopolitical tensions in the Middle East, a more downbeat macroeconomic narrative and elevated uncertainty. Measures of financial stress and volatility remain low, and equity markets continue to look through both the conflict and softer data. That resilience sits alongside a more nuanced macro backdrop. The IMF’s latest WEO revisions point to a classic stagflationary energy shock—growth downgraded and inflation revised higher—although the global impact remains modest and uneven, with some economies still benefiting from stronger momentum (chart 1). At the same time, market pricing appears increasingly detached from the data flow, with volatility declining even as growth surprises have turned more negative relative to inflation (charts 2 and 3). Incoming inflation data reinforce the idea of a largely headline-driven shock, with nowcasts rising in line with higher energy prices but only limited pass-through into core inflation so far (charts 4 and 5). However, it remains early days. Survey evidence, such as the latest ZEW release, suggests that inflation expectations may already be responding in a more concerning way, with a marked rise alongside weakening growth sentiment (chart 6). Taken together, the key question for markets is whether this remains a contained, energy-driven shock that can be looked through—or whether it begins to embed more persistently via expectations, forcing a reassessment of the currently benign outlook.

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Charts of the Week: Risks Build, Markets Shrug

Sandy Batten

260423F8.jpg

260423G8.jpg

The National Activity Index published by the Federal Reserve Bank of Chicago (CFNAI) slipped to -0.20 in March from an upwardly revised +0.03 in February (previously (-0.11). This is the lowest monthly reading since last November. Smoothing out the monthly volatility, the index's three-month moving average (CFNAI-MA3) declined to -0.03 in March from an upwardly revised +0.03 in February (previously -0.01).

This index is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the FRB Chicago indicates that readings on the 3-month average of -0.70 or below are consistent with the economy being in a recession. Therefore, even though the March reading on the 3-month average was negative, it indicates that the US economy is still growing, just slightly slower than trend, and is well away from recessionary conditions. The 3-month average would be much deeper in negative territory if the economy was at risk of contracting.

The National Activity Index is a composite of 85 economic indicators, grouped into four major categories: production and income; employment, unemployment, and hours worked; personal consumption and housing; sales, orders, and inventories. Three of the four broad categories of indicators used to construct the index decreased from February, and three categories made negative contributions in March. Production-related indicators contributed –0.20 to the CFNAI in March, down from +0.13 in February. The sales, orders, and inventories category's contribution to the CFNAI was –0.01 in March, down from +0.05 in February. Employment-related indicators contributed +0.02 to the CFNAI in March, up from –0.15 in February. The personal consumption and housing category's contribution to the CFNAI was –0.01 in March, down from a neutral value in February.

The CFNAI Diffusion Index, which measures the breadth of the change in the component series and is also a three-month moving average, increased to –0.04 in March from –0.08 in February. This is the highest reading since February 2025. A reading of zero indicates that all of the indicators are growing at their long-term average. If all of the underlying indicators in a given month are below their long-run averages, the diffusion index will equal -1. If all of the indicators are above their long-run averages, it will equal +1. Thirty-four of the 85 individual indicators made positive contributions to the CFNAI in March, while 51 made negative contributions. Forty-three indicators improved from February to March, while 40 indicators deteriorated and two were unchanged. Of the indicators that improved, 16 made negative contributions.

These figures are available in Haver's **SURVEYS** database.

- The monthly reading fell to -0.20 in March from an upwardly revised +0.03 in February.
- The three-month average slipped from +0.03 to -0.03.
- Despite the slip in March, the index points to near-trend economic growth and is well above recession territory.

Chicago Fed National Activity Index Slipped in March

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance rose by 6,000 to 214,000 in the week ending April 18, from 208,000 in the week ending April 11, revised from 207,000. The four-week average rose 750 to 210,750 in the week ending April 18, from 210,000 the April 11 week, revised from 209,750. The Action Economics/Haver Analytics Survey looked for 210,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 12,000 to 1.821 million in the week ending April 11, from 1.809 million in the week ending April 4. The four-week moving average rose to 1.812 million in the latest week from 1.811 million in the March 28 week. The insured unemployment rate remained at 1.2% in the week of April 11. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending April 4, the highest unemployment rates were in New Jersey (2.51%), Massachusetts (2.37%), Rhode Island (2.31%), Washington (2.25%), Minnesota (2.11%), and California (2.02%). The lowest rates were in Florida (0.30%), Louisiana (0.31%), Arkansas (0.35%), Alabama (0.36%), North Carolina (0.39%), Tennessee (0.46%), South Dakota (0.47%), Kansas and Virginia (both 0.49%). Rates in other notable states include New York (1.92%), Illinois (1.82%), Pennsylvania (1.52%), and Texas (1.04%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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- New claims rose by 6,000 to 214,000.
- Continuing claims rose by 12,000 to 1.821 million.
- The insured unemployment rate remained at 1.2%.


Economy in Brief: 2010

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