Tom Moeller

065186fe-137f-45d0-8eb8-de69dd7c0000_1220203F.jpg

91d527a2-5eec-4025-a7b9-a892c4a24bb8_1220203G.jpg

The ISM Index of Services Activity weakened significantly during January to 59.9 from 62.3 in December, revised from 62.0. Earlier figures also were revised. The series peaked at 68.4 in November. The Action Economics Forecast Survey expected 60.0 for January. Haver Analytics constructs a composite index combining the services index and the manufacturing reading released on Tuesday. This index fell to 59.6 in January from 61.9 in December. These series date back to July 1997.

In the latest services survey, the business activity reading weakened to 59.9 from 68.3 in December. It was the lowest point since May 2020. The new orders index also fell to 61.7 from 62.1 in December. A greatly lessened 27.9% (NSA) of respondents reported more orders while a reduced 13.5% reported a decline. The employment measure fell to 52.3, the lowest level since June 2021. A greatly reduced 18.5% of respondents indicated higher employment and a moderately reduced 18.5% reported it lower. The percentage indicating that employment held steady rose sharply to 63.0% of respondents. The supplier delivery index (NSA) rose to 65.7 last month after falling sharply to 63.9 in December from 75.7 in November. A greatly increased 4.6% of respondents reported faster delivery speeds while a fairly steady 36.1% reported slower speeds.

The prices index eased to 82.3 after improving to a record 83.9 in December. An increased 63.1% (NSA) of respondents reported price increases versus 57.4% in December, while 1.7% reported price declines. A lessened 35.2% reported stable prices.

The export orders series fell sharply to 45.9, its lowest point since May 2020. The imports index weakened to 51.1 in January and reversed most of its December increase to 55.5. The order backlog measure plummeted to 57.4, a nine-month low, while the inventory change index rose sharply to 47.5 from 38.3. These series are not seasonally adjusted and are not included in the nonmanufacturing composite total.

**3,2,1...Liftoff. What Does "Liftoff" Really Mean in Fed Policy?** from the Federal Reserve Bank of St. Louis is available [here](https://www.stlouisfed.org/open-vault/2022/feb/what-liftoff-means-in-fed-policy).

The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

072b74d6-dfd5-40dd-ac3e-6cfad911cae0_1220203H.jpg

50d1ec2c-ae6c-4942-bd9e-c18874dacae1_1220203I.jpg

- Component declines are widespread.
- Price index weakens.
- Composite factory & services series declines.

U.S. ISM Services Index Continues Lower in January

8b80c5a9-b6ac-4e34-a05c-87b7f4164759_1220203A.jpg

357e00f6-d60f-4fc7-ae8f-1dfec06f9b46_1220203B.jpg

Initial unemployment insurance claims fell to 238,000 in the week ended January 29 (-71.6% y/y) from 261,000 in the prior week, revised from 260,000. The Action Economics Forecast Survey expected 245,000 claims for the latest week. The 4-week moving average of claims rose to 255,000, the highest level since the second week of November.

Initial claims for the federal Pandemic Unemployment Assistance (PUA) program, which expired on September 6, 2020, are no longer included in this report. This program provided benefits to individuals who were not eligible for regular state unemployment insurance benefits, such as the self-employed.

In the week ended January 22, seasonally adjusted continued weeks claimed for regular state unemployment insurance fell to 1.628 million (-66.0% y/y) from 1.672 million in the prior week. The latest is the smallest since April 1973.

The insured unemployment rate held steady at 1.2% in the week ended January 22. The record low for the series of 1.1% occurred in April 2019.

Continued claims for both the PUA program and for Pandemic Emergency Unemployment Compensation (a program for those unemployed who had exhausted their state benefits) are no longer included in this report as both programs have expired.

In the week ended January 15, the not seasonally adjusted total number of continuing weeks claimed in all programs declined to 2.068 million from 2.141 million in the previous week.

The state insured rates of unemployment in regular programs vary widely. In the week ending January 15, the highest insured unemployment rates were in Alaska (2.96%), New Jersey (2.58%), California (2.54%), Minnesota (2.51%) and Illinois (2.25%). The lowest rates were in Virginia (0.21%), Alabama (0.29%), North Carolina (0.36%), Arizona (0.47%) and New Hampshire (0.51%). Other state insured rates of unemployment in regular programs include Pennsylvania (1.77%), Ohio (1.19%), Texas (0.94%) and Florida (0.56%). These 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 and is in the **AS1REPNA** database.

973e31a9-1eea-494a-ba73-6465ad5fcb96_1220203C.jpg

08d6db05-0e76-43da-8843-0e7c84b026c5_1220203D.jpg

- Initial claims fall to four-week low.
- Continued claims decline again.
- Insured unemployment rate holds steady.

U.S. Initial Claims for Unemployment Insurance Decline

d3ba3b40-d570-48e7-9b9c-ff10d7c400a2_1220202J.jpg

215730d9-84b1-4310-8e44-664ecd607130_1220202K.jpg

The ADP National Employment Report indicated that nonfarm private sector payrolls declined 301,000 during January (+4.7% y/y) following a 776,000 December increase, revised from 807,000. It was the first monthly decline since December 2020. A 210,000 January rise had been expected in the Action Economics Forecast Survey. The three-month average gain fell to 324,000. November payrolls increased 496,000, revised from 505,000.

ADP indicated "The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth."

Small-sized payrolls were severely impacted last month, falling 144,000 (+4.5% y/y) after rising 192,000 in December. Large-sized payrolls declined 98,000 (+4.1% y/y) after increasing 378,000 in December. Medium-sized payrolls declined 59,000 last month (+6.3% y/y) following a 206,000 December gain.

Within industry sectors, private services employment led the decline last month with a 274,000 drop (+4.9% y/y) after rising 645,000 in December. Leisure & hospitality jobs weakened 154,000 in January (+16.7% y/y) which reversed most of the 239,000 December increase. The number of trade, transportation & utilities jobs fell 62,000 (+3.0% y/y) and reversed half of December's rise. The number of education & health services jobs fell 15,000 (+3.2% y/y) after rising 81,000 in December. Employment in financial services eased 9,000 (+1.5% y/y) after a 23,000 December increase. The number of information sector jobs fell in January by 8,000 (+1.7% y/y), the first decline in six months. Professional & business services jobs slipped 3,000 (+3.7% y/y) after triple-digit gains in both November and December.

Employment amongst goods-producing firms eased 27,000 (+3.8% y/y) last month following a 131,000 December rise. The number of factory sector jobs fell 21,000 last month (+2.9% y/y) after increasing 69,000 in December. Construction sector payrolls fell 10,000 in January (+4.8% y/y) after sharp increases in each of the prior four months. Employment in the natural resource & mining sector rose 4,000 last month (9.8% y/y) after rising 2,000 in December.

The Automatic Data Processing Research Institute survey covers 411,000 companies and includes about one-fifth of U.S. private payroll employment. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

The ADP National Employment Report data can be found in Haver's **USECON** database. Historical figures date back to 2001 for private employment and the industry breakdown, and 2005 for the business size breakout. The expectation figure is available in Haver's **AS1REPNA** database.

3315e351-788b-44b1-b970-9bf0f5a4a62b_1220202L.jpg

20888b84-4fbf-45b0-826f-5153a1695f06_1220202M.jpg

* **Omicron-related job loss is widespread.**
* **Leisure & hospitality sector is notably hard hit.**
* **Construction & factory sectors suffer significantly.**

U.S. ADP Nonfarm Private Payrolls Unexpectedly Decline in January

Sandy Batten

f32b074e-22a3-4486-81a9-6305d5e33f8e_1220202A.jpg

3557a061-de7b-427d-8dd9-f5c5e853f88b_1220202B.jpg

The Mortgage Bankers Association's Loan Applications Index rebounded in the week ended January 28, rising 12.0% w/w (-37.0% y/y) and more than making up for the 7.1% weekly decline in the previous week. The rebound was led by an 18.4% w/w (-50.4% y/y) jump in loans to refinance following four consecutive weekly declines. With mortgage interest rates continuing to rise, borrowers are likely attempting to secure a refinance loan before rates go even higher. Purchase applications increased 4.0% w/w (-6.7% y/y) after having fallen 1.8% w/w in the previous week.

The share of applications for refinancing increased to 57.3% in the week ended January 28 from 55.8% in the previous week. The adjustable-rate mortgage (ARM) share of activity edged up to 4.5%, the highest since the week of March 20, 2020, from 4.4% in the prior week.

The effective interest rate on a 30-year mortgage rose for the sixth consecutive week to 3.89% in the week ended January 28, its highest since the week of March 20, 2020, from 3.85% in the previous week. The effective rate on a 15-year mortgage edged up one basis point to 3.11% and the rate on a Jumbo 30-year mortgage rose two basis points to 3.68% in the previous week. The interest rate on a 5-year adjustable-rate mortgage fell 8 basis points to 3.22%.

Applications for fixed-rate loans increased 11.8% w/w (-38.5% y/y), more than reversing a 7.6% w/w decline in the previous week. Applications for adjustable-rate mortgages jumped 14.6% w/w (+29.6% y/y) on top of a 7.2% w/w weekly gain in the previous week. ARM applications are up 53.6% over the past three weeks.

The average size of a mortgage loan roe 0.7% w/w (10.0% y/y) to $365,300 in the week ended January 28 from $362,700 in the previous week. The average size of a loan for purchase rose 1.8% w/w (+10.7% y/y) to a new record $441,100 on top of a 3.6% jump in the previous week. The average size of a refinanced loan gained 0.7% w/w (+1.0% y/y) to $308,700 in the most recent week from $306,700 in the previous week.

This survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's **SURVEYW** database.

debf0abe-9d0d-4955-af22-45c756c398e2_1220202C.jpg

8b943198-0e22-41bd-936d-48a450ed3519_1220202D.jpg

- Total applications rebounded with largest weekly gain since July 2021.
- Led by 18.4% w/w jump in refinancing, following four consecutive weekly declines.
- 30-year mortgage interest rate rose further to highest since March 2020.

U.S. Mortgage Applications Rebounded

54706c87-acf9-4a68-9b3e-dbc5fe5eb14e_1220201N.jpg

667e871c-586d-4ca5-ab11-52da32af79f4_1220201O.jpg

The value of construction put-in-place rose 0.2% (9.0% y/y) during December following a 0.6% November gain, revised from 0.4%. A 0.7% December rise had been expected in the Action Economics Forecast Survey. During all of 2021, the value of construction rose 8.2%, the strongest increase since 2015.

Private construction increased 0.7% (12.7% y/y) in December after a 0.8% November gain. Residential construction strengthened 1.1% (15.0% y/y) after a 0.7% November rise. Single-family building increased 2.1% (16.3% y/y), about the same as in November. Multi-family building rose 0.4% (9.1% y/y) and reversed November's 0.3% decline. Home improvement expenditures eased 0.1% (+15.2% y/y) in December after declining 0.8% in November.

Nonresidential private construction eased slightly (+9.1% y/y) in December after firm gains in each of the prior five months. Educational construction rose 0.8% (1.7% y/y) following four consecutive months of strong increase. Office building rose 0.7% (4.6% y/y) about the same as in November. Power building improved 0.1% (4.9% y/y) after holding steady in November. Transportation spending was little changed (-1.9% y/y) following a 5.4% surge. To the downside, communication construction fell 0.4% (-0.2% y/y) after a 0.1% rise and heath care construction fell 0.5% (+6.6% y/y) after a 0.2% increase. Manufacturing construction weakened 1.9% (+30.4% y/y) following four months of strong increase.

The value of public construction fell 1.6% (-2.9% y/y) in December after holding steady in November. Health care building declined 4.7% (+7.9% y/y) following a 2.3% increase. Power construction fell 0.7% (+47.7% y/y) following two months of strong increase. Residential construction declined 1.2% (-3.4% y/y) and added to November's 3.2% decline. Spending on educational buildings weakened 1.4% (-8.5% y/y) after rising 0.4% in November. Transportation building fell 3.0% (-6.3% y/y) after weakening 0.5% in November. Spending on highways and streets edged 0.1% higher (0.9% y/y) after falling 0.6% in November.

The construction spending figures, some of which date back to 1946, can be found in Haver's **USECON** database. The expectations reading is in the **AS1REPNA** database.

ac2d6979-a0cf-4eae-b6da-86e5e23b45fd_1220201P.jpg

58db59f0-145b-419d-890d-630cf1ba1c63_1220201Q.jpg

- Private construction increases steadily.
- Residential building strengthens, but nonresidential is little changed.
- Public sector construction weakens.

U.S. Construction Spending Inches Up in December

09f363f3-580c-467e-920c-a3d16f25cfce_1220201F.jpg

1691362b-b257-4c2d-a5db-406bbb6eb4ab_1220201G.jpg

The Institute for Supply Management (ISM) reported that its Composite Index of Manufacturing Sector Activity declined to 57.6 during January from 58.8 in December, revised from 58.7. Earlier figures were slightly revised. A level of 57.9 had been expected in the Action Economics Forecast Survey. During the last 15 years, there has been a 42% correlation between the composite index and the quarterly change in real GDP.

The new orders index weakened to 57.9 in January from 61.0 in December. The level was down from a high of 67.4 in December 2020. Twenty-five percent (NSA) of respondents reported higher new orders versus 37.0% a year ago. The production index fell to 57.8 from 59.4 in December. It was the lowest level since June 2020. The supplier delivery series slipped to 64.6 last month from 64.9, indicating quicker product delivery speeds. The inventories index eased to 53.2 from 54.6 in December.

The employment index rose to 54.5 in January from 53.9 in December. It was the highest level since March 2021. An increased 19.2% (NSA) of respondents reported more hiring versus 13.9% in January of last year while 15.1% reported a decline in jobs, up from 13.8% twelve months earlier.

The prices paid index improved to 76.1 in January after falling sharply during the prior two months. The index remained well below the June 2021 high of 92.1. Fifty-nine percent (NSA) of respondents reported higher prices versus 64.3% last year while 6.5% reported price declines after none did last January.

In other ISM series not included in the composite, the order backlog figure fell sharply to 56.4 (NSA) in January and remained well below the high of 70.6 in May of last year. The new export measure was stable at 53.7 but remained down from a November 2020 high of 57.8. The imports index rose to 55.1 in January from 53.8 in December.

The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver's **AS1REPNA** database.

f52adf43-8b6c-42ff-a304-d29e58031a8e_1220201H.jpg

a1f06eb3-5de8-4956-b83f-72f0fed79e61_1220201I.jpg

- Index falls to lowest level since November 2020.
- New orders & production decline sharply.
- Prices paid strengthen.

ISM Manufacturing Index Declines in January

aa028fa3-29c6-435c-a153-ba50e68b37b0_1220201J.jpg

dcda002f-d7e5-4e75-a53c-d8faae60f46c_1220201K.jpg

The Autodata Corporation reported that light vehicle sales during January increased 19.3% (-10.0% y/y) to 15.16 million units (SAAR). Sales were at the highest level since June of last year but remained 18.1% below the April '21 peak of 18.50 million units.

Sales of light trucks rose 21.6% (-7.1% y/y) last month to 12.05 million units, the highest level since last May. Purchases of domestically-made light trucks rose 20.8% in January (-7.4% y/y) to 9.40 million units. Adding to this increase was a 24.4% rise (-6.0% y/y) in sales of imported light trucks to 2.65 million units, though they remained below the April '21 record of 3.30 million unit sales.

Trucks' share of the light vehicle market increased to 79.5% last month but remained below an 80.4% share in October. For all of last year, the share was 77.5%, up from a low of 48.1% during all of 2009.

Passenger car sales rose 11.1% (-19.6% y/y) in January to 3.11 million units, the highest level since last August. Purchases of domestically-produced cars rose 10.1% last month (-21.8% y/y) to 2.08 million units following a 1.1% December increase. Sales of imported autos rose 13.2% in last month (-14.9% y/y) to 1.03 million units, the highest level since August.

Imports' share of the U.S. vehicle market rose in January to 24.3%, though that remained down from a 27.9% September high. Imports' share of the passenger car market rose to 33.1% last month but remained below the September high of 38.1%. Imports' share of the light truck market increased to 22.0%, the highest level since September.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the **INDUSTRY** database.

0024edbd-8fa2-45a5-bbb1-c8f7db4e303b_1220201L.jpg

c79c9101-d65f-4bc7-a45b-0111c456b0fb_1220201M.jpg

- Light truck sales rebound to eight month high.
- Auto sales rise for third straight month.
- Imports' share improves.

U.S. Light Vehicle Sales Strengthen in January

79a17649-c75a-4fa6-b0f3-e0d758e9c2c2_1220201A.jpg

41cf77f9-626b-402d-be24-66ed97ded86e_1220201B.jpg

**Retail gasoline prices** rose to $3.37 per gallon (39.8% y/y) in the week ended January 31 from $3.32 per gallon in the previous week. Prices have risen from a low of $3.28 at the end of December. Haver Analytics adjusts the gasoline price series for normal seasonal variation. The seasonally adjusted price increased to $3.49 per gallon.

The price of **West Texas Intermediate crude oil** improved to $86.37 per barrel (64.4% y/y) in the week of January 28 from $86.11 in the prior week. It was the highest price since the second week of October, 2014. Yesterday, the price rose to $88.15 per barrel. The average price of **Brent crude oil** rose to $88.60 (59.3% y/y). The price increased to $89.15 per barrel yesterday.

The price of **natural gas** rose to $4.60/mmbtu (69.7% y/y) in the week of January 28 after improving to $4.50 in the previous week. Yesterday, the price surged to $5.56/mmbtu.

In the four weeks ended January 21, growth in **gasoline demand** rose 6.1% y/y, down from 17.1% y/y late in December. Growth in demand for **all petroleum products** has been steady around 11.6% y/y. **Crude oil input to refineries** rose 6.6% y/y, half the growth in late October. **Gasoline inventories** edged up 0.1% y/y, but **crude oil inventories** declined 9.7% y/y.

The **supply of gasoline** inventories in the week ending January 21 rose to 30.2 days, its highest level since February 2021. The supply of crude oil was little changed at 26.7 days.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver's **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY**.

9c4195ee-fbee-4d12-bb22-768e3a6073aa_1220201C.jpg

651884c1-db49-4783-9a97-bf3c6e686212_1220201D.jpg

- Gasoline prices continue to rise.
- The cost of crude oil increases slightly.
- Natural gas prices strengthen.

U.S. Energy Prices Rise

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

Robert Brusca

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: February 2022

Jump to: