Carol Stone, CBE

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 

<a href="/comment/201210n.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210n.png"></a>
 <a href="/comment/201210o.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210o.png"></a>

&bull; Total borrowing in U.S. economy = 13.6% of GDP in Q3, down sharply from 66.7%
&bull; Government sector borrowing less in Q3 but still quite sizable.
&bull; Household borrowing increases with low mortgage rates.

After the massive amount of borrowing during the plunge in economic activity in Q2, there was something of a recovery in Q3 and a return of borrowing to a more typical magnitude. Total borrowing had been $13.017 trillion in Q2, at a seasonally adjusted annual rate, equal to 66.7% of GDP. In Q3, when the economy was growing again, borrowing decreased to $2.888 trillion or 13.6% of GDP. As is evident in the graph here, this is a much more ordinary relationship. Note that all the dollar figures quoted here for the borrowing amounts are seasonally adjusted annual rates.

Among sectors of the economy, the biggest swing in dollar amount of borrowing was in the federal government. In Q2, when COVID-related outlays surged, the federal government borrowed at a seasonally adjusted annual rate of $11.5 trillion. Q3's amount was much less dramatic, "just" $2.045 trillion. The Q2 spike in federal credit needs came from surges in social benefits, other transfer payments and subsidies. This last item, for instance, had averaged an annual rate of $68 billion for the eight quarters ending in Q4 2019. But in Q2, it was $1.086 trillion and in Q3, it even rose again to $1.213 trillion. Receipts, by contrast, had fallen from $3.75 trillion in Q1 to $3.47 trillion in Q2, and then recovered to $3.69 trillion in Q3.

For Q2, we had highlighted the sizable borrowing by the nonfinancial corporate business sector, which had been $1.432 trillion, revised from $1.398 trillion. In Q3, corporate business not only didn't borrow as much, it actually paid down debt, at an annual rate of $404 billion. This debt liquidation occurred in bank loans, which were paid down at an annual rate of $731 billion; this reversed a large share of borrowing corporations had done in Q1, $1.320 trillion. In Q2 they had paid down a modest $5 billion in loans. Companies continued to borrow in the bond market, but at a much slower pace than in Q2, that is, $321 billion, down from Q2's $1.699 trillion.

Households increased their borrowing in Q3. Record low mortgage rates encouraged that use of credit, which amounted to $899 billion, up from just $135 billion in Q2; the Q3 amount is large by recent comparison, but was much larger back in 2006, ahead of the Great Recession. Consumers' use of consumer credit has been modest. People had paid down $234 billion in Q2, and while they borrowed $79 billion in Q3 and $41 billion in Q1, those were small amounts relative to the prior eight or nine years.

As we pointed out for Q2, financial institutions had borrowed heavily for their category in Q1, $4.0 trillion, but paid down $1.4 trillion in Q2. They continued to pay down in Q3, $212 billion.

Net wealth in the total U.S. economy increased $4.062 trillion (quarterly rate, not annualized or seasonally adjusted) in Q3, following an increase of $7.837 trillion in Q2 and a drop of $9883 trillion in Q1. This is almost totally explained by the change in market value of corporate equities, which rose $3.909 trillion in Q3 and $8.134 trillion in Q2, with a drop of $9.611 trillion in Q1. These moves are reflected largely in the household sector net worth, which rose $3.817 trillion in Q3, following $8.294 trillion in Q2 and a decrease of $6.886 trillion in Q1.

The Financial Accounts data are in Haver's FFUNDS database. Associated information is
compiled in the Integrated Macroeconomic Accounts produced jointly with the Bureau of Economic
Analysis (BEA); these are carried in Haver's USNA database as well as in FFUNDS.

<a href="/comment/201210p.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210p.png"></a>
 <a href="/comment/201210q.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210q.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col">Financial Accounts (SAAR, Bil.$)</th>
 <th>Q3'20</th>
 <th>Q2'20</th>
 <th>Q1'20</th>
 <th>Q4'19</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" scope="col">Total Borrowing*</td>
<td >2,888</td>
<td >13,017</td>
<td >9,454</td>
<td >2,384</td>
<td >3,079</td>
<td >2,870</td>
<td >2,743</td>
</tr>
<tr>
<td class="firstcol" >&nbsp;&nbsp;&nbsp; % of GDP</td>
<td >13.6</td>
<td >66.7</td>
<td >43.8</td>
<td >11.0</td>
<td >14.4</td>
<td >13.9</td>
<td >14.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Federal Government</td>
<td >2,045</td>
<td >11,535</td>
<td >2,168</td>
<td >846</td>
<td >1,191</td>
<td >1,258</td>
<td >599</td>
 </tr>
 <tr>
 <td class="firstcol">Households</td>
<td >899</td>
<td >135</td>
<td >602</td>
<td >544</td>
<td >512</td>
<td >505</td>
<td >563</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Nonfinancial Corporate Business</td>
<td >-409</td>
<td >1,432</td>
<td >2,404</td>
<td >-13</td>
<td >448</td>
<td >271</td>
<td >387</td>
 </tr>
 <tr>
 <td class="firstcol">Financial Sectors</td>
<td >-212</td>
<td >-1,389</td>
<td >4,019</td>
<td >175</td>
<td >374</td>
<td >346</td>
<td >330</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Foreign Sector</td>
<td >143</td>
<td >215</td>
<td >-385</td>
<td >427</td>
<td >252</td>
<td >197</td>
<td >400</td>
 </tr>
 </tbody>
 </table>
 
 *Previously called "credit market borrowing" and includes debt securities plus loans. The total here includes borrowing by noncorporate business and state & local governments, not shown separately.
 


</html>

• Total borrowing in U.S. economy = 13.6% of GDP in Q3, down sharply from 66.7% • Government sector borrowing less in Q3 but still quite sizable. • Household borrowing increases with low mortgage rates. After the massive amount of [...]

U.S. Credit Demand More "Normal" Share of GDP in Q3

Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 

<a href="/comment/201210j.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210j.png"></a>
 <a href="/comment/201210k.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210k.png"></a>

&bull; Reduction due to calendar shifts.
&bull; Revenue decline led by a drop in personal tax receipts.
&bull; Outlay surge driven by higher unemployment benefit payments.

The U.S. Treasury Department reported that the federal budget
deficit declined to $145.3 billion during November compared to $208.8 billion
twelve months earlier. The Action Economics Survey anticipated a $200.0 billion
deficit for last month.

Federal government outlays rose 8.9% y/y two months into the
new fiscal year compared to a 47.3% rise during all of FY 2020. The increase was driven by
a 66.7% surge in income security payments so far in FY21 stemming from
coronavirus relief payments and a higher unemployment rate. Spending on health
care programs increased 18.0% y/y. Social security payments grew a lessened 4.2%
y/y but defense outlays eased 0.1% y/y in FY21. Medicare payments declined 15.0%
this fiscal year, although the decline largely reflected a weekend start date
for the month. Interest payments eased 4.9% so far this fiscal year.

Overall revenues declined 2.9% y/y so far this fiscal year.
The recession has lowered individual income tax payments by 12.8% y/y and corporate
tax receipts by 16.1% so far in FY21. Growth in social insurance payments
rose to 8.1% y/y, and the reduction in global economic trade lowered customs
duties by 17.5% y/y.

Haver's data on Federal Government outlays are contained in USECON;
detailed data can be found in the GOVFIN database. The Action Economics
Forecast Survey numbers are in the AS1REPNA database.

<a href="/comment/201210l.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210l.png"></a>
 <a href="/comment/201210m.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210m.png"></a>


	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >United States Government
 Finance</th>
 <th scope="col" ></th>
 <th scope="col" >Nov</th>
 <th scope="col" >FY'20</th>
 <th scope="col" >FY'19</th>
 <th scope="col" >FY'18</th>
 <th scope="col" >FY'17</th>
 </tr>
 </thead>
 
 
 <td class="firstcol" >Budget Balance (Billion $)</td>
 <td>--</td>
 <td>$-145.3</td>
 <td>$-3,132</td>
 <td>$-984.16</td>
 <td>$-779.00</td>
 <td>$-665.80</td>
 <tr class="odd">
 <td class="firstcol" >Fiscal YTD</td>
 <td>--</td>
 <td>-429.3</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;As a percent of GDP</td>
 <td>--</td>
 <td>19.4%</td>
 <td>16.1%</td>
 <td>4.6%</td>
 <td>3.8%</td>
 <td>3.5%</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" ></td>
 <td>% of Total (FY 2020)</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr>
 <td class="firstcol" >Net Revenues (Fiscal Year YTD 2021, Y/Y %
 Change)</td>
 <td>100</td>
 <td>-2.9%</td>
 <td>-1.2%</td>
 <td>4.0%</td>
 <td>0.4%</td>
 <td>1.5%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Individual Income Taxes</td>
 <td>47</td>
 <td>-12.8</td>
 <td>-6.4</td>
 <td>2.0</td>
 <td>6.1</td>
 <td>2.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Corporate Income Taxes</td>
 <td>6</td>
 <td>-16.1</td>
 <td>-8.0</td>
 <td>12.5</td>
 <td>-31.1</td>
 <td>-0.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Social Insurance Taxes</td>
 <td>38</td>
 <td>8.1</td>
 <td>5.4</td>
 <td>6.2</td>
 <td>0.8</td>
 <td>4.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Customs Duties</td>
 <td>2</td>
 <td>-17.5</td>
 <td>-3.2</td>
 <td>71.4</td>
 <td>19.4</td>
 <td>-0.8</td>
 </tr>
 <tr>
 <td class="firstcol" ></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr>
 <td class="firstcol" >Net Outlays&nbsp; (Fiscal Year YTD 2021,
 Y/Y % Change)</td>
 <td>100</td>
 <td>8.9</td>
 <td>47.3</td>
 <td>8.2</td>
 <td>3.2</td>
 <td>3.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;National Defense</td>
 <td>11</td>
 <td>-0.1</td>
 <td>5.6</td>
 <td>8.8</td>
 <td>0.1</td>
 <td>6.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Health</td>
 <td>11</td>
 <td>18.0</td>
 <td>28.0</td>
 <td>6.1</td>
 <td>9.8</td>
 <td>-1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Medicare</td>
 <td>12</td>
 <td>-15.0</td>
 <td>19.2</td>
 <td>10.6</td>
 <td>-1.4</td>
 <td>0.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Income Security</td>
 <td>19</td>
 <td>66.7</td>
 <td>145.0</td>
 <td>3.9</td>
 <td>-1.6</td>
 <td>-2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Social Security</td>
 <td>17</td>
 <td>4.2</td>
 <td>4.9</td>
 <td>5.7</td>
 <td>4.5</td>
 <td>3.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Veterans Benefits &amp; Services</td>
 <td>3</td>
 <td>-13.4</td>
 <td>9.3</td>
 <td>11.8</td>
 <td>1.3</td>
 <td>1.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Education, Training, Employment
 &amp; Social Services</td>
 <td>4</td>
 <td>9.3</td>
 <td>75.5</td>
 <td>43.8</td>
 <td>-34.0</td>
 <td>31.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Interest</td>
 <td>5</td>
 <td>-4.9</td>
 <td>-8.2</td>
 <td>15.7</td>
 <td>23.6</td>
 <td>9.1</td>
 </tr>
 
 
 

</html>

• Reduction due to calendar shifts. • Revenue decline led by a drop in personal tax receipts. • Outlay surge driven by higher unemployment benefit payments. The U.S. Treasury Department reported that the federal budget deficit [...]

U.S. Government Budget Deficit Narrows in November

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 
 

<a href="/comment/201210e.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210e.png" align="left"></a>
French manufacturing IP rose by 0.5% in October after a 2.3% gain in September. IP is up at a 48.4% annual rate over three months, at a 129.7% annual rate over six months and yet still lower by 5.7% over 12 months. Such has been the damage and destruction wreaked in trying to control Covid-19.

In the quarter-to-date, IP is rising at a 14.9% annual rate. The output of consumer durable goods is lagging while consumer nondurables is slightly leading the growth rate of other sectors with capital goods and intermediate goods output both at double digit rates of expansion.

Auto output and vehicle registrations have gone through a roller coaster of ups and downs with the table at this point only memorializing the ‘ups.' The Corona-19 virus and the lockdown to maintain its spread have put the French economy through an incredible stress-test of sorts as it did with much of the rest of the world. The auto data show this off the best. The manufacturing PMI data in the table are now smoothed and not showing any degree of the chaos that the virus helped to create. But the chart shows that the PMI gyrated in step with the index of industrial production in manufacturing.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210.png" width="660" height="260">


France is currently embroiled in the end game of a second lockdown to curtail the next wave of virus. This second wave peaked with daily infections up to 88,790 on November 7, a huge step up from the 7,578 daily peak back at the end of March. But since early-November, the French infection rate has been steadily and rapidly falling. Although the total infection curve and the number deaths curves are still rising, the number of deaths is far below the numbers that the peaks reached back in April despite the far higher rate of infection in this wave! The comparisons are really quite striking.

These trends imply that a lot of has been learned about dealing with a treating the virus and that the virus must have killed a number of extremely vulnerable people the first time around. This time around in France, it is infecting people with stronger immune systems who can get infected and recover.

In any event, France is making progress and stemming the second wave and this success is putting the economy back into gear. Of course, the data from October do not begin to reflect the setbacks to economic data that are yet to be reported for November when the virus ran wild and when lockdown steps were taken. A nationwide lockdown was implemented in France on Wednesday, October 28 and was set to be in place for one month. This is the act that subdued the second wave's spread. All France's restaurants, bars and nonessential businesses were ordered shut down starting that very Friday, and French President Emmanuel Macron said people should return to full-time remote work wherever possible. These steps proved sufficient to reduce the infection rate sharply, but they also will have taken a toll on the economy in data we have yet to see.

We do not know if there will be a third wave in France. There has been a set of reinfections across Europe and currently in the United States. But there is a vaccine that is already being deployed in the U.K. and vaccines are being mooted for early use in the U.S. and in other countries. However, vaccine supplies will be scarce to start and it is not clear how long it will take before a large enough swath of the local populations is immunized to put the virus off its game. That will depend on a number of variables including the health officials' priorities in designating the order for inoculation from this scarce resource. Will they choose to inoculate to damp the spread the fastest… or to protect the most vulnerable first? Of course, front line hearth workers will get their doses before anything else is done.

For now the French economy is coming out of its second round of intensive care over the virus. It is re-normalizing. But the future is still clouded even with the presence of several effective vaccines that are ready to go. ‘Soon' we may be able to get back to considering economic matters using only economic analysis instead of constantly deferring to medical realities. But there may be another six or even nine months before that world opens up to us. Until it does, we are all at risk in one way or another.


Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
</html>

French manufacturing IP rose by 0.5% in October after a 2.3% gain in September. IP is up at a 48.4% annual rate over three months, at a 129.7% annual rate over six months and yet still lower by 5.7% over 12 months. Such has been the [...]

French IP Index Still Lags Below Pre-Covid-19 Levels in October

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

<a href="/comment/201210f.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210f.png"></a>
 <a href="/comment/201210g.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210g.png"></a>

&bull; Retail price inflation remains under control.
&bull; Goods prices continue to firm y/y.
&bull; Service price inflation is decelerating.

The Consumer Price Index rose 0.2% (1.2% y/y) during November
following no change in October. A 0.1% improvement had been expected in the
Action Economics Forecast Survey. The CPI excluding food &amp; energy also rose
0.2% (1.6% y/y) last month, also after stability in October. A 0.1% gain had been expected.

Goods prices excluding food &amp; energy edged 0.1% higher
(1.4% y/y) after a 0.2% October decline and increases between 0.7% and 1.0%
during the prior three months. The 1.4% y/y increase compares to y/y price
declines from January through July. Home appliance prices jumped 2.2% last month
and the 6.1% y/y gain was improved from -2.1% y/y in January. The cost of household
furnishings strengthened 0.9% (2.9% y/y) following two straight months of
decline. Apparel prices also firmed 0.9% but fell 5.2% y/y. Prices for education
&amp; communication goods increased 0.4% (-4.3% y/y) following two months of
negative readings. Recreation goods prices rose 0.3% (-1.0% y/y) following two straight
months of decline. To the downside, used car &amp; truck prices fell 1.3%
(+10.9% y/y) and new vehicle costs dipped 0.1% (+1.6% y/y). Medical care product
costs fell 0.3% (-1.1% y/y) after weakening during the prior four months. That
compared to a 2.5% increase during all of last year.

Services prices rose 0.2% (1.7% y/y) last month after
improving 0.1% in October. Education &amp; communication prices held steady but
strengthened 2.4% y/y. Tuition costs rose 0.2% (1.3% y/y). Medical care service
prices eased 0.1% and the 3.2% y/y rise compared to 6.0% y/y as of June. Shelter
costs rose 0.1% and by a greatly lessened 1.9% y/y. The owners' equivalent rent
of primary residences held steady and gained 2.3% y/y. To
the upside, recreation services prices strengthened 0.5% (2.6% y/y) following a
0.7% strengthening. The cost of public transportation jumped 2.5%, strong for
the third straight month, but fell 12.0% y/y.

Energy product prices moved 0.4% higher (-9.4% y/y) following
a 0.1% improvement. The cost of natural gas surged 3.1% (4.4% y/y), strong for
the second month in the last three. Fuel oil prices strengthened 3.6% (-26.4%
y/y). Electricity prices rose 0.5% (1.6% y/y) following two months of strong
increase while gasoline prices slipped 0.4% (-19.3% y/y) after falling 0.5%.

Food prices eased 0.1% and by a strengthened 3.7% y/y. Food-at-home prices
eased 0.3% (+3.6% y/y). The decline reflected a 0.5% drop (+2.4% y/y) in cereal
&amp; bakery product prices. A 1.0% rise (4.3% y/y) in egg prices countered the
weakness. Meat, poultry &amp; fish prices edged 0.1% higher (6.0% y/y). Fruit &amp; vegetable prices held
steady (3.0% y/y). Dairy &amp; dairy product prices rose 0.3% (3.6 y/y), up from a 2.4% rise last year.
Nonalcoholic beverage prices declined 0.9% (+3.0% y/y). Prices of food away from
home rose 0.1% (NSA) and by a strengthened 3.8% y/y.

The Consumer Price Index data can be found in Haver's USECON
database with additional detail in CPIDATA. The Action Economics survey
figure is in the AS1REPNA database.

<a href="/comment/201210h.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210h.png"></a>
 <a href="/comment/201210i.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210i.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Consumer Price Index, All
 Urban Consumers (% chg)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td>0.2</td>
 <td>0.0</td>
 <td>0.2</td>
 <td>1.2</td>
 <td>1.8</td>
 <td>2.4</td>
 <td>2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Total less Food &amp; Energy</td>
 <td>0.2</td>
 <td>0.0</td>
 <td>0.2</td>
 <td>1.6</td>
 <td>2.2</td>
 <td>2.1</td>
 <td>1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Goods less Food &amp; Energy</td>
 <td>0.1</td>
 <td>-0.2</td>
 <td>0.8</td>
 <td>1.4</td>
 <td>0.2</td>
 <td>-0.2</td>
 <td>-0.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Services less Energy</td>
 <td>0.2</td>
 <td>0.1</td>
 <td>0.0</td>
 <td>1.7</td>
 <td>2.8</td>
 <td>2.9</td>
 <td>2.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Food</td>
 <td>-0.1</td>
 <td>0.2</td>
 <td>0.0</td>
 <td>3.7</td>
 <td>1.9</td>
 <td>1.4</td>
 <td>0.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Energy</td>
 <td>0.4</td>
 <td>0.1</td>
 <td>0.8</td>
 <td>-9.4</td>
 <td>-2.1</td>
 <td>7.5</td>
 <td>7.9</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

• Retail price inflation remains under control. • Goods prices continue to firm y/y. • Service price inflation is decelerating. The Consumer Price Index rose 0.2% (1.2% y/y) during November following no change in October. A 0.1% [...]

U.S. Consumer Price Index & Core Prices Resume Increase

Gerald D. Cohen

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

<a href="/comment/201210a.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210a.png"></a>
 <a href="/comment/201210b.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210b.png"></a>

&bull; State and Federal Pandemic Unemployment Assistance initial claims return to September levels.
&bull; Continuing claims increase for state, while PUA and PEUC decline.
&bull; Absent action, 13.1 million PUA and PEUC claimants will lose their benefits in January.
&bull; Department of Labor wording change reflects challenges in reporting continuing claims.

Seasonally adjusted state initial jobless claims for unemployment insurance jumped to 853,000 in the week ending December 5 from a slightly upwardly-revised 716,000 in the previous week (was 712,000). This is the highest level of claims since September 19. The Action Economics Forecast Survey anticipated 720,000. A change in the calculation of seasonal adjustment factors created a break in the series in late August. Though the current comparison to mid-September is valid, comparisons to before August 22 are not. For more details, please see the September 3 <a href="http://www.haver.com/comment/comment.html?c=200903B.html">commentary</a> on jobless claims.

Claims for the federal Pandemic Unemployment Assistance (PUA) program, which covers individuals such as the self-employed who are not qualified for regular/state unemployment insurance, surged to 427,609 from 288,234. This is the highest since September 26. Numbers for this and other federal programs are not seasonally adjusted.

Seasonally adjusted state continuing claims for unemployment insurance rose to 5.757 million in the week ending November 28, from 5.527 million. Continuing PUA claims, which are lagged an additional week and not seasonally adjusted, declined to 8.556 million from 8.870 million. Pandemic Emergency Unemployment Compensation (PEUC) claims edged down to 4.533 million in the week ending November 21. This program covers people who were unemployed before COVID but exhausted their state benefits and are now eligible to receive an additional 13 weeks of unemployment insurance, up to a total of 39 weeks. Funding for both PUA and PEUC programs is set to expire on December 26, which means that at current levels, 13.1 million people would lose their benefits in January.

In their latest <a href="https://oui.doleta.gov/press/2020/121020.pdf">report</a> the Department of Labor changed the description of continuing claims from "Persons Claiming" to "Continued Weeks Claimed" noting "continued weeks claimed represent all weeks of benefits claimed during the week being reported, and do not represent the number of unique individuals filing continued claims." This is a result of challenges states have had reporting backlogs in claims. For more details on this issue, see <a href="https://link.springer.com/epdf/10.1057/s11369-020-00190-4?sharing_token=e8USi1ZSKGqRAqkz6hZgjVxOt48VBPO10Uv7D6sAgHumNhv26ZsvXgZQqnzSCVr6xvtC9_M5XbHsRkYGjXRBWVraQWhXKPdYs6EP7muKZKNUI8DUbecrILyy7y7qYbCbp01kKYj1_IEE3vbdbkVxbECEBuB1wh8N2b4yhNVu5dE%3D">Measuring employment during COVID 19: challenges and opportunities</a>.

The seasonally adjusted state insured rate of unemployment ticked up to 3.9% in the week ending November 28 from 3.8%. This data does not include the federal pandemic assistance programs. If you include the latest data available, which is lagged one additional week, the total number of state, PUA and PEUC continuing claims rose to 18.9 million or 11.8% of the labor force.

The state insured rates of unemployment &#8211; which do not include federal programs &#8211; continued to show wide variation with South Dakota at just 0.7% and California at 6.3%. The largest states ranged between 1.6% for Florida and the 6.3% noted above for California. The state rates are not seasonally adjusted.

Data on weekly unemployment claims going back to 1967 are contained in Haver's
WEEKLY database, and they are summarized monthly in USECON. Data for individual
states are in REGIONW. The expectations figure is from the Action Economics Forecast Survey,
carried in the AS1REPNA database.

<a href="/comment/201210c.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210c.png"></a>
 <a href="/comment/201210d.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201210d.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" >Unemployment Insurance (SA, 000s)</th>
 <th>12/05/20</th>
 <th>11/28/20</th>
 <th>11/21/20</th>
 <th>Y/Y %</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Initial Claims</td>
<td >853</td>
<td >716</td>
<td >787</td>
<td >260</td>
<td >218</td>
<td >221</td>
<td >244</td>
 </tr>
 <tr>
 <td class="firstcol" >Initial Claims (NSA)</td>
<td >948</td>
<td >719</td>
<td >836</td>
<td >198</td>
<td >218</td>
<td >221</td>
<td >243</td>
 </tr>
 <tr>
 <td class="firstcol" >Initial Claims Pandemic Unemployment Assistance (NSA)</td>
<td >428</td>
<td >288</td>
<td >319</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Continuing Claims</td>
 <td>--</td>
<td >5,757</td>
<td >5,527</td>
<td >239</td>
<td >1,701</td>
<td >1,756</td>
<td >1,961</td>
 </tr>
 <tr>
 <td class="firstcol" >Continuing Claims (NSA)</td>
 <td>--</td>
<td >5,781</td>
<td >5,248</td>
<td >229</td>
<td >1,704</td>
<td >1,763</td>
<td >1,964</td>
 </tr>
 <tr>
 <td class="firstcol" >Continuing Claims Pandemic Unemployment Assistance
 (SA)</td>
 <td>--</td>
 <td>--</td>
<td >8,556</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Insured Unemployment Rate (%)</td>
 <td>--</td>
<td >3.9</td>
<td >3.8</td>
 <td>
 1.2 
 (Dec 2019)
 </td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.4</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

• State and Federal Pandemic Unemployment Assistance initial claims return to September levels. • Continuing claims increase for state, while PUA and PEUC decline. • Absent action, 13.1 million PUA and PEUC claimants will lose their [...]

COVID Resurgence Hits U.S. Labor Market as Initial Jobless Claims Jump

<html>

<head>
<meta http-equiv="Content-Type" content="text/html; charset=windows-1252">
<meta name="GENERATOR" content="Microsoft FrontPage 4.0">
<meta name="ProgId" content="FrontPage.Editor.Document">
<title>NABE Projects Moderate Recovery in 2021 Following a Record Postwar
Recession by Tom Moeller&nbsp; December 7</title>
</head>



 

• Retail price inflation remains under control.
• Goods prices continue to firm y/y.
• Service price inflation is decelerating.
The Consumer Price Index rose 0.2% (1.2% y/y) during November
following no change in October. A 0.1% improvement had been expected in the
Action Economics Forecast Survey. The CPI excluding food &amp; energy also rose
0.2% (1.6% y/y) last month, also after stability in October. A 0.1% gain had been
expected.
Goods prices excluding food &amp; energy edged 0.1% higher
(1.4% y/y) after a 0.2% October decline and increases between 0.7% and 1.0%
during the prior three months. The 1.4% y/y increase compares to y/y price
declines from January through July. Home appliance prices jumped 2.2% last month
and the 6.1% y/y gain was improved from -2.1% y/y in January. The cost of household
furnishings strengthened 0.9% (2.9% y/y) following two straight months of
decline. Apparel prices also firmed 0.9% but fell 5.2% y/y. Prices for education
&amp; communication goods increased 0.4% (-4.3% y/y) following two months of
negative readings. Recreation goods prices rose 0.3% (-1.0% y/y) following two straight
months of decline. To the downside, used car &amp; truck prices fell 1.3%
(+10.9% y/y) and new vehicle costs dipped 0.1% (+1.6% y/y). Medical care product
costs fell 0.3% (-1.1% y/y) after weakening during the prior four months. That
compared to a 2.5% increase during all of last year.
Services prices rose 0.2% (1.7% y/y) last month after
improving 0.1% in October. Education &amp; communication prices held steady but
strengthened 2.4% y/y. Tuition costs rose 0.2% (1.3% y/y). Medical care service
prices eased 0.1% and the 3.2% y/y rise compared to 6.0% y/y as of June. Shelter
costs rose 0.1% and by a greatly lessened 1.9% y/y. The owners' equivalent rent
of primary residences held steady and gained 2.3% y/y. To
the upside, recreation services prices strengthened 0.5% (2.6% y/y) following a
0.7% strengthening. The cost of public transportation jumped 2.5%, strong for
the third straight month, but fell 12.0% y/y.
Energy product prices moved 0.4% higher (-9.4% y/y) following
a 0.1% improvement. The cost of natural gas surged 3.1% (4.4% y/y), strong for
the second month in the last three. Fuel oil prices strengthened 3.6% (-26.4%
y/y). Electricity prices rose 0.5% (1.6% y/y) following two months of strong
increase while gasoline prices slipped 0.4% (-19.3% y/y) after falling 0.5%.
Food prices eased 0.1% and by a strengthened 3.7% y/y. Food-at-home prices
eased 0.3% (+3.6% y/y). The decline reflected a 0.5% drop (+2.4% y/y) in cereal
&amp; bakery product prices. A 1.0% rise (4.3% y/y) in egg prices countered the
weakness. Meat, poultry &amp;
fish prices edged 0.1% higher (6.0% y/y). Fruit &amp; vegetable prices held
steady (3.0% y/y). Dairy &amp; dairy
product prices rose 0.3% (3.6 y/y), up from a 2.4% rise last year.
Nonalcoholic beverage prices declined 0.9% (+3.0% y/y). Prices of food away from
home rose 0.1% (NSA) and by a strengthened 3.8% y/y.
The Consumer Price Index data can be found in Haver's USECON
database with additional detail in CPIDATA. The Action Economics survey
figure is in the AS1REPNA database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="1096">Consumer Price Index, All
 Urban Consumers (% chg)</th>
 <th scope="col" width="110">Nov</th>
 <th scope="col" width="110">Oct</th>
 <th scope="col" width="110">Sep</th>
 <th scope="col" width="110">Nov Y/Y</th>
 <th scope="col" width="110">2019</th>
 <th scope="col" width="110">2018</th>
 <th scope="col" width="111">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1096">Total</td>
 <td align="center" width="110">0.2</td>
 <td align="center" width="110">0.0</td>
 <td align="center" width="110">0.2</td>
 <td align="center" width="110">1.2</td>
 <td align="center" width="110">1.8</td>
 <td align="center" width="110">2.4</td>
 <td align="center" width="111">2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1096">Total less Food &amp; Energy</td>
 <td align="center" width="110">0.2</td>
 <td align="center" width="110">0.0</td>
 <td align="center" width="110">0.2</td>
 <td align="center" width="110">1.6</td>
 <td align="center" width="110">2.2</td>
 <td align="center" width="110">2.1</td>
 <td align="center" width="111">1.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="1096">&nbsp;&nbsp;Goods less Food &amp; Energy</td>
 <td align="center" width="110">0.1</td>
 <td align="center" width="110">-0.2</td>
 <td align="center" width="110">0.8</td>
 <td align="center" width="110">1.4</td>
 <td align="center" width="110">0.2</td>
 <td align="center" width="110">-0.2</td>
 <td align="center" width="111">-0.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1096">&nbsp;&nbsp;Services less Energy</td>
 <td align="center" width="110">0.2</td>
 <td align="center" width="110">0.1</td>
 <td align="center" width="110">0.0</td>
 <td align="center" width="110">1.7</td>
 <td align="center" width="110">2.8</td>
 <td align="center" width="110">2.9</td>
 <td align="center" width="111">2.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1096">&nbsp;Food</td>
 <td align="center" width="110">-0.1</td>
 <td align="center" width="110">0.2</td>
 <td align="center" width="110">0.0</td>
 <td align="center" width="110">3.7</td>
 <td align="center" width="110">1.9</td>
 <td align="center" width="110">1.4</td>
 <td align="center" width="111">0.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1096">&nbsp;Energy</td>
 <td align="center" width="110">0.4</td>
 <td align="center" width="110">0.1</td>
 <td align="center" width="110">0.8</td>
 <td align="center" width="110">-9.4</td>
 <td align="center" width="110">-2.1</td>
 <td align="center" width="110">7.5</td>
 <td align="center" width="111">7.9</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Government Budget Deficit Deepens in October 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;December 10, 2020
• Revenues decline and outlays surge.
The U.S. Treasury Department reported that the federal budget
deficit increased to $284.1 billion during October compared to $134.5 billion
twelve months earlier. The Action Economics Survey anticipated a $279.0 billion
deficit for last month.
Federal government outlays jumped 37.3% y/y to $521.8 billion
last month compared to a 47.3% rise during all of FY 2020. The increase was
driven by a 134.9% surge in income security payments to $72.7 billion, stemming
from coronavirus relief payments and a higher unemployment rate. Medicare
spending surged 72.1% y/y to $96.3 billion while health care spending increased
22.9% y/y to $63.1 billion. Social security payments grew a lessened 4.4% y/y to
$92.9 billion but growth in defense outlays picked up to 11.6% y/y, $79.7
billion. Interest payments eased slightly to $32.4 billion.
Overall revenues declined 3.2% y/y to $237.7 billion during
October. The recession lowered individual income tax payments by 14.0% y/y to
$108.7 billion, but corporate tax receipts rose 39.3% y/y to $9.2 billion.
Growth in social insurance tax payments picked up slightly to 6.7% y/y to $95.9
billion, and the reduction in global economic trade lowered customs duties by
20.6% y/y to $6.2 billion.
Haver's data on Federal Government outlays are contained in USECON;
detailed data can be found in the GOVFIN database. The Action Economics
Forecast Survey numbers are in the AS1REPNA database.

 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="839">United States Government
 Finance</th>
 <th scope="col" width="118" align="center"></th>
 <th scope="col" width="183" align="center">Oct</th>
 <th scope="col" width="184" align="center">FY'20</th>
 <th scope="col" width="184" align="center">FY'19</th>
 <th scope="col" width="184" align="center">FY'18</th>
 <th scope="col" width="184" align="center">FY'17</th>
 </tr>
 </thead>
 
 
 <td class="firstcol" width="839">Budget Balance (Billion $)</td>
 <td width="118" align="center">--</td>
 <td width="183" align="center">$-284.1</td>
 <td width="184" align="center">$-3,132</td>
 <td width="184" align="center">$-984.16</td>
 <td width="184" align="center">$-779.00</td>
 <td width="184" align="center">$-665.80</td>
 <tr class="odd">
 <td class="firstcol" width="839">Fiscal YTD</td>
 <td width="118" align="center">--</td>
 <td width="183" align="center">-</td>
 <td width="184" align="center">--</td>
 <td width="184" align="center">--</td>
 <td width="184" align="center">--</td>
 <td width="184" align="center">--</td>
 </tr>
 <tr>
 <td class="firstcol" width="839">&nbsp;&nbsp;As a percent of GDP</td>
 <td width="118" align="center">--</td>
 <td width="183" align="center">-</td>
 <td width="184" align="center">16.1%</td>
 <td width="184" align="center">4.6%</td>
 <td width="184" align="center">3.8%</td>
 <td width="184" align="center">3.5%</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" width="839"></td>
 <td width="118" align="center">% of Total (FY 2020)</td>
 <td width="183" align="center"></td>
 <td width="184" align="center"></td>
 <td width="184" align="center"></td>
 <td width="184" align="center"></td>
 <td width="184" align="center"></td>
 </tr>
 <tr>
 <td class="firstcol" width="839">Net Revenues (Fiscal Year YTD 2021, Y/Y %
 Change)</td>
 <td width="118" align="center">100</td>
 <td width="183" align="center">-3.2%</td>
 <td width="184" align="center">-1.2%</td>
 <td width="184" align="center">4.0%</td>
 <td width="184" align="center">0.4%</td>
 <td width="184" align="center">1.5%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="839">&nbsp;&nbsp;Individual Income Taxes</td>
 <td width="118" align="center">47</td>
 <td width="183" align="center">-14.0</td>
 <td width="184" align="center">-6.4</td>
 <td width="184" align="center">2.0</td>
 <td width="184" align="center">6.1</td>
 <td width="184" align="center">2.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="839">&nbsp;&nbsp;Corporate Income Taxes</td>
 <td width="118" align="center">6</td>
 <td width="183" align="center">39.3</td>
 <td width="184" align="center">-8.0</td>
 <td width="184" align="center">12.5</td>
 <td width="184" align="center">-31.1</td>
 <td width="184" align="center">-0.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="839">&nbsp;&nbsp;Social Insurance Taxes</td>
 <td width="118" align="center">38</td>
 <td width="183" align="center">6.7</td>
 <td width="184" align="center">5.4</td>
 <td width="184" align="center">6.2</td>
 <td width="184" align="center">0.8</td>
 <td width="184" align="center">4.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="839">&nbsp; Customs Duties</td>
 <td width="118" align="center">2</td>
 <td width="183" align="center">-20.6</td>
 <td width="184" align="center">-3.2</td>
 <td width="184" align="center">71.4</td>
 <td width="184" align="center">19.4</td>
 <td width="184" align="center">-0.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="839"></td>
 <td width="118" align="center"></td>
 <td width="183" align="center"></td>
 <td width="184" align="center"></td>
 <td width="184" align="center"></td>
 <td width="184" align="center"></td>
 <td width="184" align="center"></td>
 </tr>
 <tr>
 <td class="firstcol" width="839">Net Outlays&nbsp; (Fiscal Year YTD 2021,
 Y/Y % Change)</td>
 <td width="118" align="center">100</td>
 <td width="183" align="center">37.3</td>
 <td width="184" align="center">47.3</td>
 <td width="184" align="center">8.2</td>
 <td width="184" align="center">3.2</td>
 <td width="184" align="center">3.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="839">&nbsp;&nbsp;National Defense</td>
 <td width="118" align="center">11</td>
 <td width="183" align="center">11.6</td>
 <td width="184" align="center">5.6</td>
 <td width="184" align="center">8.8</td>
 <td width="184" align="center">0.1</td>
 <td width="184" align="center">6.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="839">&nbsp;&nbsp;Health</td>
 <td width="118" align="center">11</td>
 <td width="183" align="center">22.9</td>
 <td width="184" align="center">28.0</td>
 <td width="184" align="center">6.1</td>
 <td width="184" align="center">9.8</td>
 <td width="184" align="center">-1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="839">&nbsp;&nbsp;Medicare</td>
 <td width="118" align="center">12</td>
 <td width="183" align="center">72.1</td>
 <td width="184" align="center">19.2</td>
 <td width="184" align="center">10.6</td>
 <td width="184" align="center">-1.4</td>
 <td width="184" align="center">0.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="839">&nbsp;&nbsp;Income Security</td>
 <td width="118" align="center">19</td>
 <td width="183" align="center">134.9</td>
 <td width="184" align="center">145.0</td>
 <td width="184" align="center">3.9</td>
 <td width="184" align="center">-1.6</td>
 <td width="184" align="center">-2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="839">&nbsp;&nbsp;Social Security</td>
 <td width="118" align="center">17</td>
 <td width="183" align="center">4.4</td>
 <td width="184" align="center">4.9</td>
 <td width="184" align="center">5.7</td>
 <td width="184" align="center">4.5</td>
 <td width="184" align="center">3.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="839">&nbsp; Veterans Benefits &amp; Services</td>
 <td width="118" align="center">3</td>
 <td width="183" align="center">69.7</td>
 <td width="184" align="center">9.3</td>
 <td width="184" align="center">11.8</td>
 <td width="184" align="center">1.3</td>
 <td width="184" align="center">1.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="839">&nbsp; Education, Training, Employment
 &amp; Social Services</td>
 <td width="118" align="center">4</td>
 <td width="183" align="center">-4.3</td>
 <td width="184" align="center">75.5</td>
 <td width="184" align="center">43.8</td>
 <td width="184" align="center">-34.0</td>
 <td width="184" align="center">31.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="839">&nbsp;&nbsp;Interest</td>
 <td width="118" align="center">5</td>
 <td width="183" align="center">-0.2</td>
 <td width="184" align="center">-8.2</td>
 <td width="184" align="center">15.7</td>
 <td width="184" align="center">23.6</td>
 <td width="184" align="center">9.1</td>
 </tr>
 






</html>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

 <a href="/comment/201209j.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209j.png"></a>
	 <a href="/comment/201209k.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209k.png"></a>

&bull; The number of job openings strengthened.&nbsp;
&bull; Hiring falters.
&bull; Layoffs increase as quits hold steady.

The Bureau of Labor Statistics reported that on the last
business day of October, the total job openings rate improved to 4.5% from
September's 4.4%, revised from 4.3%. The openings rate is calculated as job
openings as a percent of total employment plus jobs that have not yet been
filled. The October figure remained below the 4.8% record in January 2019. The
hiring rate eased to 4.1% from 4.2% in September, revised from 4.1%. The overall
layoff and discharge rate rose to 1.2% and reversed declines during the prior
two months. The quits rate held steady at an upwardly revised 2.2%, but remained
below the record 2.4% in July of last year. These figures date back to December 2000.

The job openings level rose 2.4% to 6.652 million, down 9.0%
y/y. The job openings level in the construction sector fell 29.2% y/y but in
manufacturing, it rose 30.3% y/y. It fell by 18.9% y/y in leisure &amp;
hospitality but rose 2.8% y/y in the professional &amp; business service sector.
In government, the number of job openings declined 8.0% y/y.

The private-sector job openings rate improved to 4.7% but
remained below the record rate of 5.1% reached in January 2019. The construction
sector's job openings rate held steady at 3.0% and remained well below its 5.4%
peak in April 2019. The rate in manufacturing rose m/m to 4.1% from 3.9%, and
remained up from 2.4% in March. The rate in leisure &amp; hospitality held
steady at 5.6%, remaining below the record 6.6% in June. The rate in
professional &amp; business services slipped to 5.8% but remained up from a
recent low of 4.8% in May. The government sector job openings rate edged up to
3.2% from 3.1% in September.

In October, the level of hiring declined 1.3% (+1.0% y/y) to
5.812 million following a 1.1% September fall. The hiring rate of 4.1% was below
the record 5.4% in May, but remained in the recovery's up-trend. The private
sector hiring rate edged lower to 4.5%. The government sector hiring rate
improved to 1.5% after falling from 2.5% in August. The factory sector hiring
rate eased to 3.0%, a three-month low. The leisure &amp; hospitality rate rose
to 8.1% from 8.0%. The professional &amp; business service sector hiring rate
declined to 5.3%, down from 6.0% in June, and the education &amp; health
services hiring rate improved to 3.2% from 3.0% one year earlier.

<a href="/comment/201209l.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209l.png"></a>
	 <a href="/comment/201209m.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209m.png"></a>

Data on job separations reflect a combination of layoffs and quits. The
separations rate of 3.6% in October compared to the record 9.7% in March. The
level of separations declined 8.5% y/y. Private sector separations fell 10.9%
y/y and the separations rate held steady at 3.8%, above the record low of 3.5%
in May. The separations rate rose to 5.8% in leisure &amp; hospitality,
significantly lower than 32.7% in March. The professional &amp; business rate
eased to 4.8% after surging to a record 8.0% in March. The rate in education
&amp; health services rose to 2.8% and remained above May's record low of 2.4%.

The layoff &amp; discharge rate in the private sector rose to
1.2% from the record low of 1.1% in September, but jumped to a record 1.0% from
0.6% in government. The 2.6% rate in construction was above the record low of
1.9% in September and compared to 0.9% in manufacturing. The higher 0.8% rate in
the information sector remained below the record 3.7% in April. It compared to
0.6% in finance. The professional &amp; business services layoff &amp; discharge
rate rose slightly to 1.7% but was down from an all-time high of 5.1% in March.

The steady quits rate of 2.4% in the private sector remained
up from 1.6% in April. It compared to an increased 0.8% in government and was
0.5% in June. In manufacturing, the job quits rate eased m/m to 1.8%, but
remained up from 0.9% in April. In finance, the quits rate rose to 1.4% from
1.2%, remaining below the high of 1.8% in August of last year. The quits rate in
professional &amp; business services fell to 2.8% after surging to 3.1% which
was the highest level since January. In leisure &amp; hospitality, the quits
rate rose modestly to 4.2%. The level of job quits in the private sector eased
0.1% and was down 10.5% y/y. In government, the level of quits declined 2.8% y/y.

The Job Openings and Labor Turnover Survey (JOLTS) dates to
December 2000; the figures are available in Haver's USECON database.

<a href="/comment/201209n.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209n.png"></a>
	 <a href="/comment/201209o.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209o.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS
 (Job Openings &amp; Labor Turnover Survey, SA)</a></th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Oct'19</th>
 <th scope="col" >Oct'18</th>
 <th scope="col" >Oct'17</th>
 </tr>
</thead>
<tbody>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Job Openings, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>4.5</td>
 <td>4.4</td>
 <td>4.3</td>
 <td>4.6</td>
 <td>4.7</td>
 <td>4.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>6,652</td>
 <td>6,494</td>
 <td>6,352</td>
 <td>7,309</td>
 <td>7,237</td>
 <td>6,383</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Hires, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)&nbsp;</td>
 <td>4.1</td>
 <td>4.2</td>
 <td>4.2</td>
 <td>3.8</td>
 <td>3.9</td>
 <td>3.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>5,812</td>
 <td>5,886</td>
 <td>5,952</td>
 <td>5,757</td>
 <td>5,855</td>
 <td>5,635</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Layoffs &amp; Discharges,
 Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>1.2</td>
 <td>1.0</td>
 <td>1.1</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>1,680</td>
 <td>1,437</td>
 <td>1,533</td>
 <td>1,778</td>
 <td>1,830</td>
 <td>1,819</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Quits, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>2.2</td>
 <td>2.2</td>
 <td>2.0</td>
 <td>2.3</td>
 <td>2.3</td>
 <td>2.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>3,092</td>
 <td>3.074</td>
 <td>2,839</td>
 <td>3,429</td>
 <td>3,400</td>
 <td>3,212</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

• The number of job openings strengthened. • Hiring falters. • Layoffs increase as quits hold steady. The Bureau of Labor Statistics reported that on the last business day of October, the total job openings rate improved to 4.5% from [...]

U.S. JOLTS: Job Opportunities Rate Improves But Hiring Rate Weakens

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

<a href="/comment/201209f.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209f.png"></a>
 <a href="/comment/201209g.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209g.png"></a>

&bull; Inventories increased 1.1%, while sales jumped 1.8% in October.
&bull; Wholesale inventory-to-sales ratio edged down to 1.31.

Wholesale inventories grew a greater-than-expected 1.1% in October (-2.2% year-over-year). The Informa Global Markets Survey anticipated a 0.9% gain. Wholesale inventory swings can have a meaningful impact on GDP. In the latest GDP report, third quarter inventory rebuild added 6.55 percentage points (ppt) to GDP; however, that was small relative to the 25.22 ppt contribution from the jump in consumption.

Durable goods inventories rose 0.3% (-5.5% y/y) with automotive, the largest, declining 0.2% (-7.1% y/y). Electrical equipment, the second largest, increased 1.0% (-2.0% y/y). Nondurables jumped 2.5% (2.9% y/y). Drug inventories, which make up over a quarter of nondurable inventories, grew 3.9% (14.5% y/y). Groceries, the second largest category, gained 0.8% (1.8% y/y).

Wholesale sales jumped up a greater-than-expected 1.8% during October (0.9% y/y). The Action Economics Forecast Survey anticipated a 0.5% rise. Durable goods sales increased 2.0% (4.1% y/y) as auto sales accelerated 5.3% (13.3% y/y). Nondurable wholesales gained 1.7% (-2.0%) as petroleum products rose 3.6% (-28.2% y/y), partly the result of a 1.5% increase in seasonally adjusted oil prices (-26.9% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level ticked down to 1.31 in October from 1.32. After hitting a record 1.63 in April &#8211; data goes back to 1980 &#8211; it is back to pre-COVID-19 levels. The durable goods ratio declined to 1.57 from 1.59 the lowest in over two years. Meanwhile, the nondurable I/S ratio remains was unchanged at 1.05, down meaningfully from April's 1.22 record. The durable and nondurable series go back to 1992.

The wholesale trade figures and oil prices are available in Haver's USECON database.
The expectations figure for inventories is contained in the MMSAMER database. Expectations
for sales are in the AS1REPNA database.

<a href="/comment/201209h.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209h.png"></a>
 <a href="/comment/201209i.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201209i.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Wholesale Sector - NAICS
 Classification&nbsp;(%)</th>
 <th>Oct</th>
 <th>Sep</th>
 <th>Aug</th>
 <th>Oct Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Inventories</td>
<td >1.1</td>
<td >0.9</td>
<td >0.5</td>
<td >-2.2</td>
<td >1.7</td>
<td >6.5</td>
<td >3.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Sales</td>
<td >1.8</td>
<td >0.4</td>
<td >1.2</td>
<td >0.9</td>
<td >0.6</td>
<td >6.8</td>
<td >6.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >I/S Ratio</td>
<td >1.31</td>
<td >1.32</td>
<td >1.31</td>
<td >1.35 (Oct '19)</td>
<td >1.34</td>
<td >1.28</td>
<td >1.30</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

• Inventories increased 1.1%, while sales jumped 1.8% in October. • Wholesale inventory-to-sales ratio edged down to 1.31. Wholesale inventories grew a greater-than-expected 1.1% in October (-2.2% year-over-year). The Informa Global [...]

Wholesale Inventories Rise Less Than Sales in October, I/S Ratio Ticks Down

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

250502A5.jpg

250502B5.jpg

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

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

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

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

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

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

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

250502C5.jpg

250502D5.jpg

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

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

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

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

250502X5.jpg

250502F5.jpg

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

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

Winnie Tapasanun

250502F32.jpg

250502G32.jpg

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

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

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

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

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

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

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

250502H32.jpg

250502I32.jpg

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

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

250502E.jpg

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

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

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

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

250502.jpg

Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

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.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3PzXXKrkHcwtOLipohEdnB?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

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.

Economy in Brief: December 2020

Jump to:

U.S. Credit Demand More "Normal" Share of GDP in Q3

U.S. Government Budget Deficit Narrows in November

French IP Index Still Lags Below Pre-Covid-19 Levels in October

U.S. Consumer Price Index & Core Prices Resume Increase

COVID Resurgence Hits U.S. Labor Market as Initial Jobless Claims Jump

U.S. Consumer Price Index & Core Prices Resume Increase

U.S. JOLTS: Job Opportunities Rate Improves But Hiring Rate Weakens

Wholesale Inventories Rise Less Than Sales in October, I/S Ratio Ticks Down