Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512a.jpg" width="353">
US retail sales jumped 1.4% last month following an upwardly revised 0.4% gain in March. Consensus expectations had been for a 0.7% April increase.
Excluding motor vehicles sales rose 1.1%, also twice the Consensus expectation.That followed a 0.2% March gain revised up slightly from the initial estimate of 0.1%. Nonauto retail sales less gasoline in April rose 1.0% (6.8% y/y) following a slight decline in March. Gasoline service station sales surged 1.9% (19.8% y/y).
A 1.2% (7.4% y/y) rise in building material store sales led last month&#39;s rise in spending, for the second month.
Spending on discretionary items was mixed. General merchandise store sales surged 1.5% (7.4% y/y) after falling 0.7% in March and apparel store sales recovered 2.8% (7.9% y/y) following the prior month&#39;s 2.2% decline. Furniture and electronics sales, however, fell slightly (+4.1% y/y) for the second consecutive month.
Sales of nonstore retailers (internet and catalogue) rose 0.4% (12.4% y/y) following a 1.8% March jump.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>1.4%</td>
<td>0.4%</td>
<td>8.6%</td>
<td>7.3%</td>
<td>4.3%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.1%</td>
<td>0.2%</td>
<td>8.1%</td>
<td>8.3%</td>
<td>4.7%</td>
<td>3.3%</td>
</tr>
</tbody>
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US retail sales jumped 1.4% last month following an upwardly revised 0.4% gain in March. Consensus expectations had been for a 0.7% April increase. Excluding motor vehicles sales rose 1.1%, also twice the Consensus expectation.That [...]

U.S. Retail Sales Jump

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512a.jpg" width="353">
US retail sales jumped 1.4% last month following an upwardly revised 0.4% gain in March. Consensus expectations had been for a 0.7% April increase.
Excluding motor vehicles sales rose 1.1%, also twice the Consensus expectation.That followed a 0.2% March gain revised up slightly from the initial estimate of 0.1%. Nonauto retail sales less gasoline in April rose 1.0% (6.8% y/y) following a slight decline in March. Gasoline service station sales surged 1.9% (19.8% y/y).
A 1.2% (7.4% y/y) rise in building material store sales led last month&#39;s rise in spending, for the second month.
Spending on discretionary items was mixed. General merchandise store sales surged 1.5% (7.4% y/y) after falling 0.7% in March and apparel store sales recovered 2.8% (7.9% y/y) following the prior month&#39;s 2.2% decline. Furniture and electronics sales, however, fell slightly (+4.1% y/y) for the second consecutive month.
Sales of nonstore retailers (internet and catalogue) rose 0.4% (12.4% y/y) following a 1.8% March jump.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
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<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>1.4%</td>
<td>0.4%</td>
<td>8.6%</td>
<td>7.3%</td>
<td>4.3%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.1%</td>
<td>0.2%</td>
<td>8.1%</td>
<td>8.3%</td>
<td>4.7%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Up For Third Week 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 12, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512b.jpg" width="353">
For the third consecutive week, initial claims for unemployment insurance rose. The 4,000 increase to 340,000 was smaller than the gains during the earlier two weeks (the prior week&#39;s gain was revised slightly higher), but the latest level was 4.3% above the April average. Consensus expectations had been for 329,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims rose to 324,000 (-4.8% y/y).
Continuing claims for unemployment insurance rose 15,000 and the prior week&#39;s gain was revised down slightly.
The insured unemployment rate held at 2.0% for the third consecutive weeks.
Self-employed immigrants: An analysis of recent data from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflapril2005_213.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">05/07/05</th>
<th scope="col">04/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>340</td>
<td>336</td>
<td>1.2%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,598</td>
<td>-12.6%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
OECD Leaders Lost More Forward Momentum 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 12, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512c.jpg" width="353">
The Leading Index of the Major 7 OECD economies fell for the second month. The 0.6% decline in March followed a downwardly revised 0.5% drop in February and pulled the index&#39;s six month growth rate negative.
During the last ten years there has been a 69% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven countries in the OECD.
The leaders for the European Union (15 countries) declined for the fourth straight month and the six month growth rate of 0.1% was down from roughly 6% a year ago. The German leaders fell for the fifth month in the last six due to weaker new orders, a negative yield curve and a worsening business climate. The six month growth rate fell to a -1.7%. The French leaders fell for the fifth consecutive month and the six month growth went negative for the first time since May 2003 as new job vacancies remained depressed, share prices meandered and industrial sector prospects deteriorated. The Italian leaders dipped for the forth month in five. The six month growth rate of -0.6% remained negative as it has since last May due to a lower future tendency of orders books and of production.
The leading index for the US economy fell a hard 1.0% and six month growth went negative for the first time since April 2003. A negative yield curve and a deteriorating business climate indicator caused the decline. The leaders for Japan fell for the fourth straight month and six month growth was a negative 0.7% due to a tighter yield curve and fewer overtime hours worked.
The UK economic leaders slipped for the fifth consecutive month with six month growth solidly negative at -1.2% due to higher interest rates and weaker export prospects.The Canadian leaders have trended lower for a year and six month growth of -3.5% was the worst in two years. The yield curve is sharply inverted and housing starts are down.
The latest OECD Leading Indicator report can be found <a href="http://www.oecd.org/dataoecd/60/47/34858128.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/OECDMEI/OECDMEI.HTM">OECD</a></th>
<th scope="col">March</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Leading Index&nbsp;</td>
<td>101.37</td>
<td>102.00</td>
<td>-0.6%</td>
<td>101.99</td>
<td>97.51</td>
<td>96.33</td>
</tr>
<tr>
<td class="firstcol">&nbsp;6 Month Growth Rate</td>
<td>-1.3%</td>
<td>-0.1%</td>
<td>&nbsp;</td>
<td>3.6%</td>
<td>2.5%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
Higher Tax Receipts Lowered U.S. Budget Deficit 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 12, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512d.jpg" width="353">
April tax revenues surged and reduced the U.S. federal government&#39;s budget deficit during the first seven months of FY 2005 by 16.5% versus the first the seven months of FY 2004.
Net receipts for the first seven months of FY05 jumped 13.7% y/y. Individual tax receipts surged 16.1% versus FY04 as April personal taxes rose 43.3% against April of last year. Corporate tax receipts continued up strongly. Reflecting the improved job market, employment taxes grew 6.0% versus 1.3% growth last year.
Growth in federal outlays remained about stable at 7.3% versus the first seven months of 2005. Growth in Medicare outlays was strong at 9.1% and social security outlays grew 5.5%. Veterans benefits grew 15.2% and defense spending slowed to 7.0% growth. Interest expense grew 11.1% with higher rates.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E10602.HTM">US Government Finance</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">FY &#39;05 - YTD</th>
<th scope="col">FY2004</th>
<th scope="col">FY2003</th>
<th scope="col">FY2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$57.7B</td>
<td>$-71.2B</td>
<td>$-236.9B</td>
<td>$-412.1B</td>
<td>$-377.6B</td>
<td>$-157.8B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Net Revenues</td>
<td>$277.6B</td>
<td>$148.7B</td>
<td>13.7%</td>
<td>5.5%</td>
<td>-3.8%</td>
<td>-6.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Net Outlays</td>
<td>$219.9B</td>
<td>$210.0B</td>
<td>7.3%</td>
<td>6.1%</td>
<td>7.4%</td>
<td>7.9%</td>
</tr>
</tbody>
</table>
German Q1 Growth of 1% Boosts Euro-Zone Result to 0.5% 
by <a href="/comment/Stone.html">Carol Stone</a> May 12, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512e.jpg" width="353">
The Euro-Zone had 0.5% GDP growth in Q1, according to the Eurostat &quot;Flash&quot; estimate released today. This produced a year-on-year result of 1.4%, moderately weaker than any quarter since Q4 2003. In these early &quot;Flash&quot; figures, no details are available by type of expenditure or industry, so there&#39;s no way to tell what factors contributed to the performance.
We do, however, know something about where the developments took place. Germany experienced a nice rebound, reaching 1.0% after two quarters of virtually no growth at all. Among other Euro-Zone countries, they join the UK with its 0.6% gain in boosting Europe&#39;s economy.
Elsewhere, results were not so attractive. Italy lost 0.5% and the Netherlands, 0.1%; Belgian GDP was unchanged. Both Italy and the Netherlands GDP also decreased year-on-year.
The Netherlands reported its expenditure breakdown; private consumption edged slightly lower, and investment contracted more sharply after a good gain in Q4. Net exports decreased. The only positive input came in inventories, which grew &#128;327 million compared to &#128;192 million in Q4.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050512f.jpg" width="353">
These data are mixed now by calculation methodology. As noted in the table below, &quot;real&quot; GDP for the overall Euro-Zone remains expressed in fixed-weights and 1995 prices; Italy&#39;s own data are also still on this basis. Germany, the UK and the Netherlands have all switched to annual chain-weighting, but Germany&#39;s reference year is 2000, the Netherlands, 1995 and the UK, 2001. Euro-Zone conventions call for all countries to switch to chain-linking by late 2006. There are also differences in the treatment of imputed charges for financial services, so-called &quot;FISIM&quot;. These are to be reconciled for the most part by the end of this year, with a few countries in 2006. Consumption and net exports will be affected. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/G10.HTM">GDP % Changes</a></th>
<th scope="col">1 Qtr 2005</th>
<th scope="col">4 Qtr 2004</th>
<th scope="col">Year/ Year</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone (fixed 1995&#128;)</td>
<td>0.5</td>
<td>0.2</td>
<td>1.4</td>
<td>1.8</td>
<td>0.5</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Germany (chain 2000&#128;)</td>
<td>1.0</td>
<td>-0.1</td>
<td>0.0</td>
<td>1.6</td>
<td>0.0</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy (fixed 1995 &#128;)</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-0.2</td>
<td>1.0</td>
<td>0.4</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">Netherlands (chain 1995&#128;)</td>
<td>-0.1</td>
<td>-0.0</td>
<td>-0.3</td>
<td>1.4</td>
<td>-0.9</td>
<td>0.6</td>
</tr>
</tbody>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511g.jpg" width="353">
The surprising reduction in the US trade deficit for March begs for comparison with trade data reported today by other major countries. We&#39;ve highlighted here the role of energy in two oil-producing nations, the UK and Canada, along with the US. In the US, the petroleum deficit continued to widen, but modestly, while the non-petroleum deficit fell sharply in the month, as described by Tom Moeller in the Haver.com homepage commentary for today.
In the UK, the overall trade deficit decreased to &pound;4.4 billion in March from &pound;5.1 billion in February. The non-oil deficit also decreased, but just slightly, reflecting a 1.8% rise in non-oil exports after two successive monthly declines. The oil surplus in the UK is marginal, and in some months, oil even runs a small deficit. The non-oil deficit had widened fairly consistently from 1997 through the middle of last year and has since begun to diminish gradually, as import growth has tended to slow.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511f.jpg" width="353">
Canada&#39;s trade balance was C$4.235 billion in March, up from C$4.155 billion in February. The energy surplus is drifting down a little, with the March value, C$3.4 billion, off from the 2004 average of C$3.7 billion. Exports of energy products have flattened in the last six month, but energy imports are trending upward, as seen in the second graph. The surplus in non-energy trade has fallen more distinctly with a modest slowing of those exports.
In both the US and the UK, non-energy imports have recently turned down. For the US, this is just a one-month development and could easily be reversed, but in the UK, March was the third month. Possibly the weight of energy on these economies is starting to restrain other purchasing from abroad. This is an important development to monitor.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Millions of Local Currency, Seasonally Adjusted</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Mar 2004</th>
Monthly Average
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">UK: Balance on Goods</td>
<td>-4,412</td>
<td>-5,037</td>
<td>-4,108</td>
<td>-4,829</td>
<td>-3,972</td>
<td>-3,890</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Oil</td>
<td>384</td>
<td>44</td>
<td>193</td>
<td>163</td>
<td>344</td>
<td>478</td>
</tr>
<tr>
<td class="firstcol">Balance ex Oil</td>
<td>-4,796</td>
<td>-5,081</td>
<td>-4,519</td>
<td>-4,992</td>
<td>-4,316</td>
<td>-4,368</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Canada: Balance on Goods</td>
<td>4,235</td>
<td>4,155</td>
<td>5,584</td>
<td>5,602</td>
<td>4,848</td>
<td>4,768</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Energy</td>
<td>3,386</td>
<td>3,053</td>
<td>3,164</td>
<td>3,693</td>
<td>3,406</td>
<td>2,738</td>
</tr>
<tr>
<td class="firstcol">Balance ex Energy</td>
<td>849</td>
<td>102</td>
<td>2,420</td>
<td>1,909</td>
<td>1,442</td>
<td>2,030</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">US: Balance on Goods</td>
<td>-57,171</td>
<td>-63,538</td>
<td>-50,026</td>
<td>-54,234</td>
<td>-44,362</td>
<td>-39,022</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Petroleum</td>
<td>-16,992</td>
<td>-16,343</td>
<td>-13,013</td>
<td>-13,653</td>
<td>-10,034</td>
<td>-7,764</td>
</tr>
<tr>
<td class="firstcol">Balance ex Petroleum</td>
<td>-41,179</td>
<td>-47,195</td>
<td>-37,013</td>
<td>-40,582</td>
<td>-34,329</td>
<td>-31,258</td>
</tr>
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The surprising reduction in the US trade deficit for March begs for comparison with trade data reported today by other major countries. We've highlighted here the role of energy in two oil-producing nations, the UK and Canada, along [...]

Trade Deficit Eases in UK, Surplus Increases in Canada, but Energy May Be Starting to Restrain Demand for Non- [...]

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511e.jpg" width="353">
Total mortgage applications jumped 9.4% last week according to the Mortgage Bankers Association and began the month 13.9% ahead of the depressed April average.
Applications to purchase a home jumped 9.1% w/w and started May 11.9% ahead of April. During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance rose 9.8%.
The effective interest rate on a conventional 30-year mortgage ticked up to 6.02% from 5.98% but remained down from the high of 6.34% in late March. The effective rate on a 15-year mortgage was 5.65%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">05/06/05</th>
<th scope="col">04/29/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>781.0</td>
<td>714.1</td>
<td>5.2%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>526.2</td>
<td>482.5</td>
<td>6.5%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,263.3</td>
<td>2,061.2</td>
<td>3.6%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Total mortgage applications jumped 9.4% last week according to the Mortgage Bankers Association and began the month 13.9% ahead of the depressed April average. Applications to purchase a home jumped 9.1% w/w and started May 11.9% [...]

Mortgage Applications Surged as Rates Remained Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511d.jpg" width="353">
The Job Openings &amp; Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics indicated that the job openings rate held firm at 2.6% versus an upwardly revised level in February. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. The total number of job openings was about stable m/m but up 14.9% y/y.
The March hires rate continued the trend of improvement and rose to 3.7%. The hires rate is the number of hires during the month divided by employment.
Job separations rose and reversed most of the decline during the prior two months. The separation rate rose to 3.3%. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511c.jpg" width="353">
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">&nbsp;Mar &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.6%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.7%</td>
<td>3.6%</td>
<td>3.7%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Job Openings & Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics indicated that the job openings rate held firm at 2.6% versus an upwardly revised level in February. The job openings rate is the number of job [...]

JOLTS: U.S. Job Openings Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511b.jpg" width="353">
The Small Business Optimism Index reported by the National Federation of Independent Business (NFIB) fell another 2.6% in April and is off 7.3% from the peak last November. The decline occurred as the percentage of firms expecting the economy to improve collapsed to 5% versus 47% in November.
During the last ten years there has been a 64% correlation between the level of the NFIB index and the two quarter change in real GDP.
The job outlook brightened only slightly. The percentage of firms planning to raise employment rose one point to 11% but was half the 20% of December 2003. A brighter job market picture came from the percentage of firms with one or more job openings at 23% which was well up from the low of 15% during 2003. During the last ten years there has been a 67% correlation between hiring plans and the three month growth in nonfarm payrolls.
The percentage of firms planning to raise capital spending slid to 32%, well off from the 38% this past December.
The percentage of firms raising average selling prices slipped to 23%.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>99.8</td>
<td>102.5</td>
<td>-5.3%</td>
<td>104.6</td>
<td>101.3</td>
<td>101.2</td>
</tr>
</tbody>
</table>
</body>
</html>

The Small Business Optimism Index reported by the National Federation of Independent Business (NFIB) fell another 2.6% in April and is off 7.3% from the peak last November. The decline occurred as the percentage of firms expecting the [...]

Small Business Optimism Down Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511a.jpg" width="353">
The U.S. foreign trade deficit improved unexpectedly in March to $55.0B from the little revised record of $60.6B in February. Consensus expectations had been for a $61.5B deficit.
Total exports jumped 1.5% following two months of little change. Goods exports surged 1.4% (6.9% y/y) on the strength of a 6.6% increase in foods, feeds &amp; beverages and a 3.3% (4.7% y/y) rise in capital goods. Exports of advanced technology products jumped 31.3% (NSA, +2.9% y/y).
In other categories export performance paled. Exports of non-auto consumer goods were unchanged (9.8% y/y) after a 3.1% spike in February and automotive exports fell 1.2% (+7.0% y/y), down for the second month.
Services exports rose 1.8% (7.7% y/y) as passenger fares jumped 3.9% 14.5% y/y) and spending on travel surged 2.8% (10.8% y/y).
Total imports slumped 2.5% despite a 4.1% (32.4% y/y) rise in petroleum products. The average price of crude oil surged 11.6% to $41.14 per bbl. (34.3% y/y). Imports of non-petroleum goods fell 4.6% (+4.7% y/y) as capital goods imports fell 1.1% (+8.3% y/y) for the second monthly decline and nonauto consumer goods imports plunged 6.8% (+4.5% y/y).
The US trade deficit with China improved for the second month to $12.9B ($162.0B in 2004) as exports surged (-2.0% y/y) and imports fell (+17.4% y/y). The US trade deficit with Japan deepened further to $7.8B ($75.2B in 2004) but the monthly trade deficit with the Asian NICs nearly dissolved ($21.9B in 2004) due to a 22.1% surge in exports (3.8% y/y). The US trade deficit with the European Union deepened to $9.3B ($110.0B in 2004), the result of an 11.7% jump in imports (+1.0% y/y) which outpaced a 12.7% (4.8% y/y) rise in exports.
Are We Underestimating the Gains from Globalization for the United States? from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci11-4.pdf"> here</a>.
The Evolution and Implications of the U.S. Current Account Deficit from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/invoke.cfm?objectid=FF60B8DE-5056-9F06-99823AB38DD7EFB2&amp;method=display"> here</a>.
Unwinding the Current Account Deficit from the Federal Reserve Bank of St. Louis can be viewed <a href="http://research.stlouisfed.org/publications/iet/20050501/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$55.0.0B</td>
<td>$60.6B</td>
<td>$47.1B (3/04)</td>
<td>$617.1B</td>
<td>$496.5B</td>
<td>$421.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>1.5%</td>
<td>0.2%</td>
<td>7.1%</td>
<td>12.4%</td>
<td>4.6%</td>
<td>-3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-2.5%</td>
<td>1.5%</td>
<td>10.3%</td>
<td>16.3%</td>
<td>8.5%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. foreign trade deficit improved unexpectedly in March to $55.0B from the little revised record of $60.6B in February. Consensus expectations had been for a $61.5B deficit. Total exports jumped 1.5% following two months of [...]

U.S. Trade Deficit Posted Surprising Improvement

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511a.jpg" width="353">
The U.S. foreign trade deficit improved unexpectedly in March to $55.0B from the little revised record of $60.6B in February. Consensus expectations had been for a $61.5B deficit.
Total exports jumped 1.5% following two months of little change. Goods exports surged 1.4% (6.9% y/y) on the strength of a 6.6% increase in foods, feeds &amp; beverages and a 3.3% (4.7% y/y) rise in capital goods. Exports of advanced technology products jumped 31.3% (NSA, +2.9% y/y).
In other categories export performance paled. Exports of non-auto consumer goods were unchanged (9.8% y/y) after a 3.1% spike in February and automotive exports fell 1.2% (+7.0% y/y), down for the second month.
Services exports rose 1.8% (7.7% y/y) as passenger fares jumped 3.9% 14.5% y/y) and spending on travel surged 2.8% (10.8% y/y).
Total imports slumped 2.5% despite a 4.1% (32.4% y/y) rise in petroleum products. The average price of crude oil surged 11.6% to $41.14 per bbl. (34.3% y/y). Imports of non-petroleum goods fell 4.6% (+4.7% y/y) as capital goods imports fell 1.1% (+8.3% y/y) for the second monthly decline and nonauto consumer goods imports plunged 6.8% (+4.5% y/y).
The US trade deficit with China improved for the second month to $12.9B ($162.0B in 2004) as exports surged (-2.0% y/y) and imports fell (+17.4% y/y). The US trade deficit with Japan deepened further to $7.8B ($75.2B in 2004) but the monthly trade deficit with the Asian NICs nearly dissolved ($21.9B in 2004) due to a 22.1% surge in exports (3.8% y/y). The US trade deficit with the European Union deepened to $9.3B ($110.0B in 2004), the result of an 11.7% jump in imports (+1.0% y/y) which outpaced a 12.7% (4.8% y/y) rise in exports.
Are We Underestimating the Gains from Globalization for the United States? from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci11-4.pdf"> here</a>.
The Evolution and Implications of the U.S. Current Account Deficit from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/invoke.cfm?objectid=FF60B8DE-5056-9F06-99823AB38DD7EFB2&amp;method=display"> here</a>.
Unwinding the Current Account Deficit from the Federal Reserve Bank of St. Louis can be viewed <a href="http://research.stlouisfed.org/publications/iet/20050501/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$55.0.0B</td>
<td>$60.6B</td>
<td>$47.1B (3/04)</td>
<td>$617.1B</td>
<td>$496.5B</td>
<td>$421.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>1.5%</td>
<td>0.2%</td>
<td>7.1%</td>
<td>12.4%</td>
<td>4.6%</td>
<td>-3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-2.5%</td>
<td>1.5%</td>
<td>10.3%</td>
<td>16.3%</td>
<td>8.5%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Small Business Optimism Down Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511b.jpg" width="353">
The Small Business Optimism Index reported by the National Federation of Independent Business (NFIB) fell another 2.6% in April and is off 7.3% from the peak last November. The decline occurred as the percentage of firms expecting the economy to improve collapsed to 5% versus 47% in November.
During the last ten years there has been a 64% correlation between the level of the NFIB index and the two quarter change in real GDP.
The job outlook brightened only slightly. The percentage of firms planning to raise employment rose one point to 11% but was half the 20% of December 2003. A brighter job market picture came from the percentage of firms with one or more job openings at 23% which was well up from the low of 15% during 2003. During the last ten years there has been a 67% correlation between hiring plans and the three month growth in nonfarm payrolls.
The percentage of firms planning to raise capital spending slid to 32%, well off from the 38% this past December.
The percentage of firms raising average selling prices slipped to 23%.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>99.8</td>
<td>102.5</td>
<td>-5.3%</td>
<td>104.6</td>
<td>101.3</td>
<td>101.2</td>
</tr>
</tbody>
</table>
JOLTS: U.S. Job Openings Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511d.jpg" width="353">
The Job Openings &amp; Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics indicated that the job openings rate held firm at 2.6% versus an upwardly revised level in February. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. The total number of job openings was about stable m/m but up 14.9% y/y.
The March hires rate continued the trend of improvement and rose to 3.7%. The hires rate is the number of hires during the month divided by employment.
Job separations rose and reversed most of the decline during the prior two months. The separation rate rose to 3.3%. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511c.jpg" width="353">
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">&nbsp;Mar &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.6%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.7%</td>
<td>3.6%</td>
<td>3.7%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Mortgage Applications Surged as Rates Remained Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511e.jpg" width="353">
Total mortgage applications jumped 9.4% last week according to the Mortgage Bankers Association and began the month 13.9% ahead of the depressed April average.
Applications to purchase a home jumped 9.1% w/w and started May 11.9% ahead of April. During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance rose 9.8%.
The effective interest rate on a conventional 30-year mortgage ticked up to 6.02% from 5.98% but remained down from the high of 6.34% in late March. The effective rate on a 15-year mortgage was 5.65%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">05/06/05</th>
<th scope="col">04/29/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>781.0</td>
<td>714.1</td>
<td>5.2%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>526.2</td>
<td>482.5</td>
<td>6.5%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,263.3</td>
<td>2,061.2</td>
<td>3.6%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Trade Deficit Eases in UK, Surplus Increases in Canada, but Energy May Be Starting to Restrain Demand for Non-Energy Imports 
by <a href="/comment/Stone.html">Carol Stone</a> May 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511g.jpg" width="353">
The surprising reduction in the US trade deficit for March begs for comparison with trade data reported today by other major countries. We&#39;ve highlighted here the role of energy in two oil-producing nations, the UK and Canada, along with the US. In the US, the petroleum deficit continued to widen, but modestly, while the non-petroleum deficit fell sharply in the month, as described by Tom Moeller in the Haver.com homepage commentary for today.
In the UK, the overall trade deficit decreased to &pound;4.4 billion in March from &pound;5.1 billion in February. The non-oil deficit also decreased, but just slightly, reflecting a 1.8% rise in non-oil exports after two successive monthly declines. The oil surplus in the UK is marginal, and in some months, oil even runs a small deficit. The non-oil deficit had widened fairly consistently from 1997 through the middle of last year and has since begun to diminish gradually, as import growth has tended to slow.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511f.jpg" width="353">
Canada&#39;s trade balance was C$4.235 billion in March, up from C$4.155 billion in February. The energy surplus is drifting down a little, with the March value, C$3.4 billion, off from the 2004 average of C$3.7 billion. Exports of energy products have flattened in the last six month, but energy imports are trending upward, as seen in the second graph. The surplus in non-energy trade has fallen more distinctly with a modest slowing of those exports.
In both the US and the UK, non-energy imports have recently turned down. For the US, this is just a one-month development and could easily be reversed, but in the UK, March was the third month. Possibly the weight of energy on these economies is starting to restrain other purchasing from abroad. This is an important development to monitor.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Millions of Local Currency, Seasonally Adjusted</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Mar 2004</th>
Monthly Average
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">UK: Balance on Goods</td>
<td>-4,412</td>
<td>-5,037</td>
<td>-4,108</td>
<td>-4,829</td>
<td>-3,972</td>
<td>-3,890</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Oil</td>
<td>384</td>
<td>44</td>
<td>193</td>
<td>163</td>
<td>344</td>
<td>478</td>
</tr>
<tr>
<td class="firstcol">Balance ex Oil</td>
<td>-4,796</td>
<td>-5,081</td>
<td>-4,519</td>
<td>-4,992</td>
<td>-4,316</td>
<td>-4,368</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Canada: Balance on Goods</td>
<td>4,235</td>
<td>4,155</td>
<td>5,584</td>
<td>5,602</td>
<td>4,848</td>
<td>4,768</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Energy</td>
<td>3,386</td>
<td>3,053</td>
<td>3,164</td>
<td>3,693</td>
<td>3,406</td>
<td>2,738</td>
</tr>
<tr>
<td class="firstcol">Balance ex Energy</td>
<td>849</td>
<td>102</td>
<td>2,420</td>
<td>1,909</td>
<td>1,442</td>
<td>2,030</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">US: Balance on Goods</td>
<td>-57,171</td>
<td>-63,538</td>
<td>-50,026</td>
<td>-54,234</td>
<td>-44,362</td>
<td>-39,022</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Petroleum</td>
<td>-16,992</td>
<td>-16,343</td>
<td>-13,013</td>
<td>-13,653</td>
<td>-10,034</td>
<td>-7,764</td>
</tr>
<tr>
<td class="firstcol">Balance ex Petroleum</td>
<td>-41,179</td>
<td>-47,195</td>
<td>-37,013</td>
<td>-40,582</td>
<td>-34,329</td>
<td>-31,258</td>
</tr>
</tbody>
</table>
</body>
</html>

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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

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

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

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.

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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.

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- 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

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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.

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- 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

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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.

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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.

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

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

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

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

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

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

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Charts of the Week: Tariff Truce, Tenuous Trust

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U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

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

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- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

Economy in Brief: May 2005

Jump to:

U.S. Retail Sales Jump

U.S. Retail Sales Jump

Trade Deficit Eases in UK, Surplus Increases in Canada, but Energy May Be Starting to Restrain Demand for Non- [...]

Mortgage Applications Surged as Rates Remained Low

JOLTS: U.S. Job Openings Firm

Small Business Optimism Down Further

U.S. Trade Deficit Posted Surprising Improvement

U.S. Trade Deficit Posted Surprising Improvement