Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511f.jpg" align="left" border="0">
On a seasonally adjusted basis, industrial production in
France declined 1.4% from February to March; and, in Italy, 4.6.%. For
the quarter industrial production in France was down 6.8% compared with
6.9% in the fourth quarter. The comparable figures for Italy were 8.4%
and 9.8%. To the extent that industrial production is a predictor of
gross domestic product, these figures suggest that the first quarter
decline in GDP in France will be about the same as in the fourth
quarter of last year, that is, 1.12% (or 4.4% at an annual rate), while
that in Italy is likely to be somewhat greater than the 1.49% (or 7.5%
at an annual rate) in the fourth quarter of last year. The first chart
shows quarterly data for industrial production and GDP for France and
the second, the similar data for Italy.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511g.jpg" align="right" border="0">
These production data indicate the depth and severity of the
recession in these countries in the first quarter, but should not
detract from the implications of more recent data such as the
purchasing managers surveys and business confidence measures that
suggest that the these economies are, at worst reaching a bottom or at
best, showing faint signs of improvement.
One can even see some light in the monthly unadjusted
production data. The year over year decline in industrial product in
France was 12.6% in March, down from 18.6% in February. The comparable
figures for Italy were 18.2% and 24.1%

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Mar 09</th>
<th scope="col">Feb &nbsp; 09</th>
<th scope="col">Jan 09</th>
<th scope="col">Mar 09</th>
<th scope="col">Feb &nbsp; 09</th>
<th scope="col">Jan 09</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol"> Italy</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Index</td>
<td>Index</td>
<td>Index</td>
<td> M/M % </td>
<td>M/M %</td>
<td>M/M %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production
SA</td>
<td>80.8</td>
<td>84.7</td>
<td>88.8</td>
<td>-4.60</td>
<td>-4.62</td>
<td>1.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2005=100)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production
NSA</td>
<td>81.6</td>
<td>85.4</td>
<td>90.6</td>
<td>-18.23</td>
<td>-24.09</td>
<td>-22.80</td>
</tr>
<tr class="even">
<td class="firstcol">France</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td> M/M % </td>
<td>M/M %</td>
<td>M/M %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production
SA</td>
<td>84.6</td>
<td>85.5</td>
<td>86.2</td>
<td>-1.37</td>
<td>-0.91</td>
<td>-3.92</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2005=100)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production
NSA</td>
<td>93.0</td>
<td>85.5</td>
<td>89.0</td>
<td>-12.59</td>
<td>-18.57</td>
<td>-16.04</td>
</tr>
</tbody>
</table>
</body></html>

On a seasonally adjusted basis, industrial production in France declined 1.4% from February to March; and, in Italy, 4.6.%. For the quarter industrial production in France was down 6.8% compared with 6.9% in the fourth quarter. The [...]

March Industrial Production Data For Italy And France

Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511a.jpg" align="right" border="0">

Expanding on last week's piece by Louise Curley on the Haver
Analytics website, past deflation of pricing power has eased and may be
tuning positive. By extension, U.S. economic improvement may be in the
offing. What is unknown, of course, is when the improvement sets in and
how strong it will be. To begin with, economic liquidity is on the
rise. The yield spread between the 10-year Treasury
note and the Federal funds rate has steepened dramatically since its
inverted stance at the beginning of last year. That steepening occurred
as Treasury yields first dropped sharply when the recession intensified
late last year, then rose as the economic news was digested. The Fed's
response to the recession was, of course, to first lower the Fed funds
rate to near zero and then leave it there, pumping in economic
liquidity all the while.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511b.jpg" align="right" border="0">Liquidity indeed has increased due to the Fed's
actions.
Though it decelerated recently, growth the money stock
(M2) over the last six months has roughly tripled to 15% while the
level of bank reserves has more than doubled. These increases have yet,
however, to translate into any surge in economic activity. Indeed, the
lags between liquidity provision and overall economic activity have
been up to six months in the past, and they likely will be longer this
time around. The "front-end" economic response to Fed easing comes from
the consumer &amp; housing sectors. Historically, retail spending
recovered quickly at a rate of 5% or more to end recessions. This time,
while spending has stabilized, a robust recovery is in question. A
rebuilding of consumers' balance sheets, i.e. a rise in the savings
rate, has started but may take some time to play out. Moreover, any
delay in a spending recovery may be lengthened by consumer
demographics. They soon will dampen the spending impetus with the aging
of the baby-boom population. That all will dampen any improvement in
housing activity, which has yet to materially begin.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511c.jpg" align="right" border="0">The
rise in liquidity has yet to devalue the U.S.
dollar. A lower dollar would improve the outlook for exports
with lower prices and dampen imports with higher prices. The delay
probably is the result of the developing economic weakness abroad. In
fact, the dollar's trade-weighted value rose by 20% as of early this
year and is down just moderately since its peak this March. The dollar
really is not working much as a stabilizing factor of the U.S. foreign
trade imbalance.
Commodity prices have strengthened
significantly with more liquidity. Lower oil prices last year pulled
down the measures of industrial commodity prices, but this year the
measures have risen. That not only reflects the moderate recovery in
oil which has raised the FIBER commodity price measure by more than
one-quarter, but metals prices have risen as well. Copper scrap prices
have nearly doubled from their January low while aluminum prices have
risen 15% during the last two months. Steel scrap prices have moved
sideways since January, but the level is up by nearly one half from the
December low. Lead and zinc prices have significantly strengthened as
well. In addition to higher metals prices are several indications that
activity outside of the industrial sector is recovering. Prices for
cotton are now one-third higher than this past March. Even the
housing-related prices of framing lumber and wallboard bottomed and
have risen modestly.
When these signals will translate into an end to the U.S.
recession is, of course, the overriding question. The Blue
Chip economic forecast <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511d.jpg" align="right" border="0">
indicates that recovery will begin in
the second half of this year. But while economic growth typically has
surged following past recessions, the Consensus forecast is for just
2.1% growth next year followed by moderate 2.5% to 3.0% growth in the
years following. As for prices, the recovery in economic activity,
combined with the liquidity highlighted above, is expected to halt any
decline in prices. Indeed, consumer price inflation
is expected to stabilize next year then rise to a 2.5% rate in 2011 and
thereafter.
The figures referenced above are available in Haver's USWEEKLY
database. The Blue Chip Economic forecast data is in USECON.
Lessons of the Financial Crisis for Banking
Supervision is last week's speech by Fed Chairman Ben S.
Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20090507a.htm">here.</a>



</body></html>

Expanding on last week's piece Louise Curley Curley on the Haver Analytics website, past deflation of pricing power has eased and may be tuning positive. By extension, U.S. economic improvement may be in the offing. What is unknown, of [...]

Liquidity, Exchange Rates & Commodity Prices Point Toward U.S. Economic Improvement

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511e.jpg" align="left" border="0" height="265" width="353">
Taken in a rather broad perspective the downturn according to
the OECD&#8217;s LEIs which are cyclically adjusted is quite severe; the
worst since 1970, at least. But the US and several counties in OECD
Europe are showing signs of doing less badly which means, potentially,
showing signs of turning the corner on recession. 
 

Readings for France and Italy are up for three months running
through March. China and UK indices are up for two months in a row. The
OECD has characterized these economies and well as the OECD regions as
being in a &#8216;strong slowdown&#8217;. It now says that in France, Italy and the
UK troughs may have been reached. 
 

Among developing countries China shows the clearest sign of
troughing while Brazil and India continue to emit signals that say that
they are still declining. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">OECD
Trend-restored leading Indicators </th>
</tr>
<tr class="grey4">
<th colspan="5" scope="col"> Growth
progression-SAAR</th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> 3Mos</td>
<td> 6Mos</td>
<td> 12mos</td>
<td> Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>-5.7%</td>
<td> -10.4%</td>
<td> -9.5%</td>
<td> -0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>-8.8%</td>
<td> -13.0%</td>
<td> -10.9%</td>
<td> -1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>-11.5%</td>
<td> -15.6%</td>
<td> -12.1%</td>
<td> -1.0%</td>
</tr>
<tr class="grey4">
<td colspan="5" class="firstcol">Six
month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Recent six</td>
<td> 6Mo Ago</td>
<td> 12Mo Ago</td>
<td> 18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td> -10.4%</td>
<td> -8.5%</td>
<td> -1.2%</td>
<td> -0.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td> -13.0%</td>
<td> -8.7%</td>
<td> -1.9%</td>
<td> -0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td> -15.6%</td>
<td> -8.4%</td>
<td> -2.6%</td>
<td> 0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD JAPAN</td>
<td> -15.6%</td>
<td> -8.4%</td>
<td> -2.6%</td>
<td> 0.7%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Slowdowns
indicated by 
BOLD RED</td>
</tr>
</tbody>
</table>
</body></html>

Taken in a rather broad perspective the downturn according to the OECD’s LEIs which are cyclically adjusted is quite severe; the worst since 1970, at least. But the US and several counties in OECD Europe are showing signs of doing [...]

OECD LEIs The Long View

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Expanding on last week&#39;s piece by Louise Curley on the Haver Analytics website, past deflation of pricing power has eased and may be tuning positive. By extension, U.S. economic improvement may be in the offing. What is unknown, of course, is when the improvement sets in and how strong it will be. To begin with, economic liquidity is on the rise. The yield spread between the 10-year Treasury note and the Federal funds rate has steepened dramatically since its inverted stance at the beginning of last year. That steepening occurred as Treasury yields first dropped sharply when the recession intensified late last year, then rose as the economic news was digested. The Fed&#39;s response to the recession was, of course, to first lower the Fed funds rate to near zero and then leave it there, pumping in economic liquidity all the while.
Liquidity indeed has increased due to the Fed&#39;s actions. Though it decelerated recently, growth the money stock (M2) over the last six months has roughly tripled to 15% while the level of bank reserves has more than doubled. These increases have yet, however, to translate into any surge in economic activity. Indeed, the lags between liquidity provision and overall economic activity have been up to six months in the past, and they likely will be longer this time around. The &quot;front-end&quot; economic response to Fed easing comes from the consumer &amp; housing sectors. Historically, retail spending recovered quickly at a rate of 5% or more to end recessions. This time, while spending has stabilized, a robust recovery is in question. A rebuilding of consumers&#39; balance sheets, i.e. a rise in the savings rate, has started but may take some time to play out. Moreover, any delay in a spending recovery may be lengthened by consumer demographics. They soon will dampen the spending impetus with the aging of the baby-boom population. That all will dampen any improvement in housing activity, which has yet to materially begin.<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511e.jpg">
The rise in liquidity has yet to devalue the U.S. dollar. A lower dollar would improve the outlook for exports with lower prices and dampen imports with higher prices. The delay probably is the result of the developing economic weakness abroad. In fact, the dollar&#39;s trade-weighted value rose by 20% as of early this year and is down just moderately since its peak this March. The dollar really is not working much as a stabilizing factor of the U.S. foreign trade imbalance.
Commodity prices have strengthened significantly with more liquidity. Lower oil prices last year pulled down the measures of industrial commodity prices, but this year the measures have risen. That not only reflects the moderate recovery in oil which has raised the FIBER commodity price measure by more than one-quarter, but metals prices have risen as well. Copper scrap prices have nearly doubled from their January low while aluminum prices have risen 15% during the last two months. Steel scrap prices have moved sideways since January, but the level is up by nearly one half from the December low. Lead and zinc prices have significantly strengthened as well. In addition to higher metals prices are several indications that activity outside of the industrial sector is recovering. Prices for cotton are now one-third higher than this past March. Even the housing-related prices of framing lumber and wallboard bottomed and have risen modestly.
When these signals will translate into an end to the U.S. recession is, of course, the overriding question. The Blue Chip economic forecast indicates that recovery will begin in the second half of this year. But while economic growth typically has surged following past recessions, the Consensus forecast is for just 2.1% growth next year followed by moderate 2.5% to 3.0% growth in the years following. As for prices, the recovery in economic activity, combined with the liquidity highlighted above, is expected to halt any decline in prices. Indeed, consumer price inflation is expected to stabilize next year then rise to a 2.5% rate in 2011 and thereafter.
The figures referenced above are available in Haver&#39;s USWEEKLY database. The Blue Chip Economic forecast data is in USECON.
Lessons of the Financial Crisis for Banking Supervision is last week&#39;s speech by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20090507a.htm">here.</a>

German Industrial Output Halts Its Strong Of Declines      
by <a href="/comment/Brusca.html">Robert Brusca</a> May 11, 2009


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511f.jpg" width="353">
On a seasonally adjusted basis, industrial production in France declined 1.4% from February to March; and, in Italy, 4.6.%. For the quarter industrial production in France was down 6.8% compared with 6.9% in the fourth quarter. The comparable figures for Italy were 8.4% and 9.8%. To the extent that industrial production is a predictor of gross domestic product, these figures suggest that the first quarter decline in GDP in France will be about the same as in the fourth quarter of last year, that is, 1.12% (or 4.4% at an annual rate), while that in Italy is likely to be somewhat greater than the 1.49% (or 7.5% at an annual rate) in the fourth quarter of last year. The first chart shows quarterly data for industrial production and GDP for France and the second, the similar data for Italy.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511g.jpg" width="353">
These production data indicate the depth and severity of the recession in these countries in the first quarter, but should not detract from the implications of more recent data such as the purchasing managers surveys and business confidence measures that suggest that the these economies are, at worst reaching a bottom or at best, showing faint signs of improvement.
One can even see some light in the monthly unadjusted production data. The year over year decline in industrial product in France was 12.6% in March, down from 18.6% in February. The comparable figures for Italy were 18.2% and 24.1%

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Mar 09</th>
<th scope="col">Feb &nbsp; 09</th>
<th scope="col">Jan 09</th>
<th scope="col">Mar 09</th>
<th scope="col">Feb &nbsp; 09</th>
<th scope="col">Jan 09</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol"> Italy</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Index</td>
<td>Index</td>
<td>Index</td>
<td> M/M % </td>
<td>M/M %</td>
<td>M/M %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production SA</td>
<td>80.8</td>
<td>84.7</td>
<td>88.8</td>
<td>-4.60</td>
<td>-4.62</td>
<td>1.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2005=100)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production NSA</td>
<td>81.6</td>
<td>85.4</td>
<td>90.6</td>
<td>-18.23</td>
<td>-24.09</td>
<td>-22.80</td>
</tr>
<tr class="even">
<td class="firstcol">France</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td> M/M % </td>
<td>M/M %</td>
<td>M/M %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production SA</td>
<td>84.6</td>
<td>85.5</td>
<td>86.2</td>
<td>-1.37</td>
<td>-0.91</td>
<td>-3.92</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2005=100)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production NSA</td>
<td>93.0</td>
<td>85.5</td>
<td>89.0</td>
<td>-12.59</td>
<td>-18.57</td>
<td>-16.04</td>
</tr>
</tbody>
</table>


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511e.jpg" width="353">
Taken in a rather broad perspective the downturn according to the OECD&#146;s LEIs which are cyclically adjusted is quite severe; the worst since 1970, at least. But the US and several counties in OECD Europe are showing signs of doing less badly which means, potentially, showing signs of turning the corner on recession. 
Readings for France and Italy are up for three months running through March. China and UK indices are up for two months in a row. The OECD has characterized these economies and well as the OECD regions as being in a &#145;strong slowdown&#146;. It now says that in France, Italy and the UK troughs may have been reached. 
Among developing countries China shows the clearest sign of troughing while Brazil and India continue to emit signals that say that they are still declining. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
OECD Trend-restored leading Indicators
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5"> Growth progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> 3Mos</td>
<td> 6Mos</td>
<td> 12mos</td>
<td> Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>-5.7%</td>
<td> -10.4%</td>
<td> -9.5%</td>
<td> -0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>-8.8%</td>
<td> -13.0%</td>
<td> -10.9%</td>
<td> -1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>-11.5%</td>
<td> -15.6%</td>
<td> -12.1%</td>
<td> -1.0%</td>
</tr>
<tr class="grey4">
<td colspan="5">Six month readings at 6-Mo Intervals:</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Recent six</td>
<td> 6Mo Ago</td>
<td> 12Mo Ago</td>
<td> 18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td> -10.4%</td>
<td> -8.5%</td>
<td> -1.2%</td>
<td> -0.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td> -13.0%</td>
<td> -8.7%</td>
<td> -1.9%</td>
<td> -0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td> -15.6%</td>
<td> -8.4%</td>
<td> -2.6%</td>
<td> 0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD JAPAN</td>
<td> -15.6%</td>
<td> -8.4%</td>
<td> -2.6%</td>
<td> 0.7%</td>
</tr>
<tr class="grey1">
<td colspan="5">Slowdowns indicated by BOLD RED</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508d.jpg" align="left" border="0">
German industrial production halted its string of six
consecutive declines with a flat result in March. Over three months the
negative growth rate for IP has flattened but at a still horrific -33%
(saar). Ironically, the capital goods sector shows the worst results
and fasted decline in its three month rate of growth compared to other
sectors. Yet the capital goods sector is the only sector with an output
increase in March &#8211; and a strong one at that. 
 

Construction is in its second month of increasing output.
However, manufacturing output fell in March, but it did trim that drop
to -0.2% from -3.5% previously. And of course the flat IP result fits
in nicely with the surge in German orders in March. The process of
blunting the forces of the downturn and establishing an environment of
growth is now fully engaged in Germany, Europe&#8217;s largest economy.
Coupled with the fresh ECB rate cut and the ECB&#8217;s decision on to engage
in covered bond purchases, Europe has some new reason for hope. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Total German IP
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Saar exept m/m</td>
<td>Mar-09</td>
<td> Feb-09</td>
<td> Jan-09</td>
<td> 3-mo</td>
<td> 6-mo</td>
<td> 12-mo</td>
<td> Quarter-to-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>0.0%</td>
<td>-3.4%</td>
<td>-6.3%</td>
<td>-32.7%</td>
<td>-33.1%</td>
<td>-20.3%</td>
<td>-40.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>-2.0%</td>
<td>-3.7%</td>
<td>-0.6%</td>
<td>-22.7%</td>
<td>-14.6%</td>
<td>-9.8%</td>
<td>-13.9%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>2.5%</td>
<td>-5.2%</td>
<td>-13.5%</td>
<td>-50.1%</td>
<td>-41.5%</td>
<td>-24.7%</td>
<td>-55.8%</td>
</tr>
<tr>
<td class="firstcol">Intermed</td>
<td>-2.4%</td>
<td>-1.3%</td>
<td>-4.0%</td>
<td>-27.0%</td>
<td>-40.4%</td>
<td>-26.2%</td>
<td>-43.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="8">Memo</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>7.6%</td>
<td>1.9%</td>
<td>-7.5%</td>
<td>5.5%</td>
<td>14.6%</td>
<td>4.9%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">MFG IP</td>
<td>-0.2%</td>
<td>-3.5%</td>
<td>-7.7%</td>
<td>-37.8%</td>
<td>-37.1%</td>
<td>-22.9%</td>
<td>-45.7%</td>
</tr>
<tr>
<td class="firstcol">MFG Orders</td>
<td>3.3%</td>
<td>-3.1%</td>
<td>-6.7%</td>
<td>-23.9%</td>
<td>-43.3%</td>
<td>-33.1%</td>
<td>-46.5%</td>
</tr>
</tbody>
</table>
</body></html>

German industrial production halted its string of six consecutive declines with a flat result in March. Over three months the negative growth rate for IP has flattened but at a still horrific -33% (saar). Ironically, the capital goods [...]

German Industrial Output Halts Its Strong Of Declines

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508a.jpg" align="right" border="0">
Some easing
of the weakness in the U.S. labor market may be evident in the April
figures from the Bureau of Labor Statistics, but the labor market
remains soft. Nonfarm payrolls fell 539,000 last
month. It was the smallest monthly decline since October and it
compares with Consensus expectations for a 610,000 decline. Declines in
employment during the prior two months, however, were revised deeper.
During this recession so far, employment has fallen a total of 5.7
million, the record for a 16-month period. Even after accounting for
the labor force's larger size, that's a huge number. In percentage
terms, jobs are down 4.2% since the 2007 peak.The unemployment
rate very much reflects the softness in the labor market.
The rise to an expected 8.9% brought it to the highest level since
September of 1983 and that compares to the recent low of 4.4% in
October of 2006. Last months' increase reflected a&nbsp; 683,000
jump (+0.5% y/y) in the labor force juxtaposed against a moderate
rebound in household employment of 120,000 (-3.6% y/y). These household
sector figures additionally show that long-term unemployment rose
further. The average duration of unemployment rose during April to a
new record 21.4 weeks, up from 16.9 weeks during 2007. The number of
those unemployed for longer than 15 weeks more than doubled during the
last year and they accounted for nearly half of all those who are
unemployed.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508b.jpg" align="right" border="0">A glimmer of hope for the job market may be
evident. The payroll survey showed that 28.2% of industries were hiring
last month, the highest percentage since last October. The breadth of
job loss, nonetheless, remains large. In the construction industry
110,000 jobs were lost last month, bringing the total to 1.4 million
since early 2007.&nbsp; Factory jobs were down another 149,000
April, adding to the 10-year downtrend during which over 5 million jobs
have been shed, nearly one-third of the total,. In the private service
sector, the picture remained bleak as it shed 341,000 jobs last month
and nearly 3.0 million (3.0%) since the peak in late 2007. The
government sector picked up some of the job market slack last month as
more workers were hired to take the 2010 Census. Government sector
payrolls rose 72,000 (0.7% y/y) after having been flat since the middle
of last year.The length of the average workweek remained stable at a
much-reduced level of 33.2 hours. That compares with a fairly stable
level near 34 hours through late-2007 but it's been trending lower from
the high over 38 hours in the mid-1960s.The weak labor
market has taken a further toll on average hourly earnings in private
industries. The 0.1% m/m gain last month was the weakest in five years
and it pulled the three- month annualized growth rate to 1.7%, also the
lowest since early-2004. The private service sector has felt the brunt
of that weakness. The annual growth in earnings fell to just 3.2% last
month, down from a five percent growth rate in early 2006.
Surprisingly, annual growth in earnings in the factory sector has held
up at 2.8% and construction sector earnings rose a stable
4.5%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508c.jpg" align="right" border="0">The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.Trends in
consumer sentiment and spending from the Federal Reserve Bank
of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262.pdf">here.</a>
Public and Private Sector Compensation: What is Affordable
in This Recession and Beyond? - A Conference Summary, also
from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262a.pdf">here.</a>
&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-539</td>
<td>-699</td>
<td>-681</td>
<td>-3.8%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-663</td>
<td>-651</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-149</td>
<td>-167</td>
<td>-172</td>
<td>-10.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-110</td>
<td>-135</td>
<td>-113</td>
<td>-13.5%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-269</td>
<td>-381</td>
<td>-386</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.2</td>
<td>33.2</td>
<td>33.3</td>
<td>33.8 (April '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>8.9%</td>
<td>8.5%</td>
<td>8.1%</td>
<td>5.0% (April '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

Some easing of the weakness in the U.S. labor market may be evident in the April figures from the Bureau of Labor Statistics, but the labor market remains soft. Nonfarm payrolls fell 539,000 last month. It was the smallest monthly [...]

Bad News: U.S. Jobless Rate Jumps to 8.9% Good News: Speed of Job Losses Ease

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508a.jpg" align="right" border="0">
Some easing
of the weakness in the U.S. labor market may be evident in the April
figures from the Bureau of Labor Statistics, but the labor market
remains soft. Nonfarm payrolls fell 539,000 last
month. It was the smallest monthly decline since October and it
compares with Consensus expectations for a 610,000 decline. Declines in
employment during the prior two months, however, were revised deeper.
During this recession so far, employment has fallen a total of 5.7
million, the record for a 16-month period. Even after accounting for
the labor force's larger size, that's a huge number. In percentage
terms, jobs are down 4.2% since the 2007 peak.
The unemployment
rate very much reflects the softness in the labor market.
The rise to an expected 8.9% brought it to the highest level since
September of 1983 and that compares to the recent low of 4.4% in
October of 2006. Last months' increase reflected a&nbsp; 683,000
jump (+0.5% y/y) in the labor force juxtaposed against a moderate
rebound in household employment of 120,000 (-3.6% y/y). These household
sector figures additionally show that long-term unemployment rose
further. The average duration of unemployment rose during April to a
new record 21.4 weeks, up from 16.9 weeks during 2007. The number of
those unemployed for longer than 15 weeks more than doubled during the
last year and they accounted for nearly half of all those who are
unemployed.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508b.jpg" align="right" border="0">A glimmer of hope for the job market may be
evident. The payroll survey showed that 28.2% of industries were hiring
last month, the highest percentage since last October. The breadth of
job loss, nonetheless, remains large. In the construction industry
110,000 jobs were lost last month, bringing the total to 1.4 million
since early 2007.&nbsp; Factory jobs were down another 149,000
April, adding to the 10-year downtrend during which over 5 million jobs
have been shed, nearly one-third of the total,. In the private service
sector, the picture remained bleak as it shed 341,000 jobs last month
and nearly 3.0 million (3.0%) since the peak in late 2007. The
government sector picked up some of the job market slack last month as
more workers were hired to take the 2010 Census. Government sector
payrolls rose 72,000 (0.7% y/y) after having been flat since the middle
of last year.
The length of the average workweek remained stable at a
much-reduced level of 33.2 hours. That compares with a fairly stable
level near 34 hours through late-2007 but it's been trending lower from
the high over 38 hours in the mid-1960s.
The weak labor
market has taken a further toll on average hourly earnings in private
industries. The 0.1% m/m gain last month was the weakest in five years
and it pulled the three- month annualized growth rate to 1.7%, also the
lowest since early-2004. The private service sector has felt the brunt
of that weakness. The annual growth in earnings fell to just 3.2% last
month, down from a five percent growth rate in early 2006.
Surprisingly, annual growth in earnings in the factory sector has held
up at 2.8% and construction sector earnings rose a stable
4.5%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508c.jpg" align="right" border="0">The figures referenced above are available in
Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Trends in
consumer sentiment and spending from the Federal Reserve Bank
of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262.pdf">here.</a>

Public and Private Sector Compensation: What is
Affordable
in This Recession and Beyond? - A Conference Summary, also
from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262a.pdf">here.</a>
&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-539</td>
<td>-699</td>
<td>-681</td>
<td>-3.8%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-663</td>
<td>-651</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-149</td>
<td>-167</td>
<td>-172</td>
<td>-10.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-110</td>
<td>-135</td>
<td>-113</td>
<td>-13.5%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-269</td>
<td>-381</td>
<td>-386</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.2</td>
<td>33.2</td>
<td>33.3</td>
<td>33.8 (April '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>8.9%</td>
<td>8.5%</td>
<td>8.1%</td>
<td>5.0% (April '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>

German Industrial Output Halts Its
Strong Of Declines &nbsp;&nbsp;&nbsp;&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> May 8, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508d.jpg" align="left" border="0">
German industrial production halted its string of six
consecutive declines with a flat result in March. Over three months the
negative growth rate for IP has flattened but at a still horrific -33%
(saar). Ironically, the capital goods sector shows the worst results
and fasted decline in its three month rate of growth compared to other
sectors. Yet the capital goods sector is the only sector with an output
increase in March &#8211; and a strong one at that. 
 

Construction is in its second month of increasing output.
However, manufacturing output fell in March, but it did trim that drop
to -0.2% from -3.5% previously. And of course the flat IP result fits
in nicely with the surge in German orders in March. The process of
blunting the forces of the downturn and establishing an environment of
growth is now fully engaged in Germany, Europe&#8217;s largest economy.
Coupled with the fresh ECB rate cut and the ECB&#8217;s decision on to engage
in covered bond purchases, Europe has some new reason for hope. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Total
German IP
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Saar exept m/m</td>
<td>Mar-09</td>
<td> Feb-09</td>
<td> Jan-09</td>
<td> 3-mo</td>
<td> 6-mo</td>
<td> 12-mo</td>
<td> Quarter-to-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>0.0%</td>
<td>-3.4%</td>
<td>-6.3%</td>
<td>-32.7%</td>
<td>-33.1%</td>
<td>-20.3%</td>
<td>-40.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>-2.0%</td>
<td>-3.7%</td>
<td>-0.6%</td>
<td>-22.7%</td>
<td>-14.6%</td>
<td>-9.8%</td>
<td>-13.9%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>2.5%</td>
<td>-5.2%</td>
<td>-13.5%</td>
<td>-50.1%</td>
<td>-41.5%</td>
<td>-24.7%</td>
<td>-55.8%</td>
</tr>
<tr>
<td class="firstcol">Intermed</td>
<td>-2.4%</td>
<td>-1.3%</td>
<td>-4.0%</td>
<td>-27.0%</td>
<td>-40.4%</td>
<td>-26.2%</td>
<td>-43.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="8">Memo</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>7.6%</td>
<td>1.9%</td>
<td>-7.5%</td>
<td>5.5%</td>
<td>14.6%</td>
<td>4.9%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">MFG IP</td>
<td>-0.2%</td>
<td>-3.5%</td>
<td>-7.7%</td>
<td>-37.8%</td>
<td>-37.1%</td>
<td>-22.9%</td>
<td>-45.7%</td>
</tr>
<tr>
<td class="firstcol">MFG Orders</td>
<td>3.3%</td>
<td>-3.1%</td>
<td>-6.7%</td>
<td>-23.9%</td>
<td>-43.3%</td>
<td>-33.1%</td>
<td>-46.5%</td>
</tr>
</tbody>
</table>
</body></html>

Bad News: U.S. Jobless Rate Jumpsto 8.9% Good News: Speed of Job Losses Ease

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507e.jpg" align="left" border="0">
Foreign orders that had been falling a bit faster than those
from domestic sources were up by a sharp 5.6% m/m in May compared to a
rise of 1.1% for orders from domestic sources. German factory orders
from outside the 16-nation euro region rose 5.1 percent in March from
February indicating that much of the orders strength was not just
foreign but outside the zone as well. Export orders for investment
goods rose 9.1 percent, driven by demand from within and outside the
euro area. 
 

Data trends however have swallowed up the good news. Three
month growth rates of orders and sales are still declining faster than
they did over six-months. Order growth is still accelerating in the
downward direction. In the quarter the drop in sales and in orders
remains horrific. 
 

Even so the rise in orders is an encouraging sign. Even if the
sharp rise this month has been crushed by the trends of past weakness,
it is step in the right direction. This is how the trip toward
stability starts. Germany is getting its break in terms of improved
demand from external sources. Germany&#8217;s domestic initiatives- as well
as initiatives from the e-Zone itself- are not yet bearing much fruit.
At least the ECB took some further steps today in monetary policy to
cut rates and to shoulder added policy moves. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col"> German Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>QTR-2-Date</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>3.3%</td>
<td>-3.1%</td>
<td>-6.7%</td>
<td>-23.9%</td>
<td>-12.8%</td>
<td>-33.1%</td>
<td>3.2%</td>
<td>-46.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>5.6%</td>
<td>-0.9%</td>
<td>-10.9%</td>
<td>-24.5%</td>
<td>-13.1%</td>
<td>-36.0%</td>
<td>3.9%</td>
<td>-53.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic</td>
<td>1.1%</td>
<td>-5.5%</td>
<td>-1.8%</td>
<td>-22.6%</td>
<td>-12.0%</td>
<td>-29.4%</td>
<td>2.2%</td>
<td>-36.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Real Sector Sales</td>
</tr>
<tr>
<td class="firstcol">MFG/Mining</td>
<td>1.5%</td>
<td>-4.7%</td>
<td>-6.6%</td>
<td>-33.7%</td>
<td>-18.6%</td>
<td>-21.9%</td>
<td>3.3%</td>
<td>-45.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer</td>
<td>-0.4%</td>
<td>-3.3%</td>
<td>-6.0%</td>
<td>-33.0%</td>
<td>-18.2%</td>
<td>-11.7%</td>
<td>-0.9%</td>
<td>-25.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Cons Durables</td>
<td>-1.4%</td>
<td>-7.8%</td>
<td>-2.2%</td>
<td>-37.4%</td>
<td>-20.9%</td>
<td>-22.9%</td>
<td>0.1%</td>
<td>-40.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Cons Non-Durable</td>
<td>-0.3%</td>
<td>-2.6%</td>
<td>-6.6%</td>
<td>-32.4%</td>
<td>-17.8%</td>
<td>-9.7%</td>
<td>-1.0%</td>
<td>-22.8%</td>
</tr>
<tr>
<td class="firstcol">Captial Gds</td>
<td>4.8%</td>
<td>-5.2%</td>
<td>-9.4%</td>
<td>-34.5%</td>
<td>-19.1%</td>
<td>-24.8%</td>
<td>6.0%</td>
<td>-53.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Gds</td>
<td>-0.7%</td>
<td>-3.3%</td>
<td>-4.6%</td>
<td>-29.6%</td>
<td>-16.1%</td>
<td>-24.6%</td>
<td>4.0%</td>
<td>-44.0%</td>
</tr>
<tr>
<td class="firstcol">All MFG-Sales</td>
<td>1.5%</td>
<td>-4.8%</td>
<td>-6.6%</td>
<td>-33.5%</td>
<td>-18.5%</td>
<td>-22.1%</td>
<td>3.3%</td>
<td>-45.3%</td>
</tr>
</tbody>
</table>
</body></html>

Foreign orders that had been falling a bit faster than those from domestic sources were up by a sharp 5.6% m/m in May compared to a rise of 1.1% for orders from domestic sources. German factory orders from outside the 16-nation euro [...]

German Orders In Surprise Rebound

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

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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 2009

Jump to:

March Industrial Production Data For Italy And France

Liquidity, Exchange Rates & Commodity Prices Point Toward U.S. Economic Improvement

OECD LEIs The Long View

Liquidity, Exchange Rates & Commodity Prices Point Toward U.S. Economic Improvement

German Industrial Output Halts Its Strong Of Declines

Bad News: U.S. Jobless Rate Jumps to 8.9% Good News: Speed of Job Losses Ease

Bad News: U.S. Jobless Rate Jumpsto 8.9% Good News: Speed of Job Losses Ease

German Orders In Surprise Rebound