Robert Brusca

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France's trade deficit in October edged deeper into deficit falling to -6bln Euros from -5.9bln Euros. Both exports and imports edged higher in October but imports rose just slightly faster. That slightly faster speed plus the fact of the trade position already being in deficit led to the slight widening in the deficit this month. 

Underlying French export flows are showing some acceleration. Export growth steps up from 2.2% over 12-months to 5.4% over 6-months and to 12% over 3-months. 

Import growth rates are no so robust. Imports grow at a 0.8% pace over 12-months and at a 0.5% pace over three months. In between they pop up to 8.3% over 6-months. There is no trend here, but there is more than a hint of still weak rates of growth. 

By commodity classification French exports are mostly accelerating from 12-months to 6-months to 3-months. Transportation equipment exports are accelerating very sharply. Conversely, imports are decelerating on all fronts from 6-months to three-months. But none of the components show any clear trend since all are relatively stronger over six months compared to 12-months. 

Still the 12-month and 3-month weakness in French imports are not in any way undone by the presence of 6-month strength The French domestic economy is weak on all counts and these import figures are more or less what we would expect to find with a weak economy. French export strength is surprising. One reason is that French military exports were up this month but apart from that there is still some life in exports. We do not see strength even in German exports and that should make us suspicious of French export acceleration. 

French trade trends, without military goods, shows the opposite pattern with imports stronger and exports weaker (see chart). French trade trades raise more questions than they answer. But the import numbers are consistent with a still weak French economy. The export ramp up seems more likely to be an artifact of the data rather than a real trend when. We view it in the connection with other recent French reports there is not context for export strength. Moreover the French trade deficit tells a pretty consistent story of little change as its 12-month, 6-monthand 3-month averages are all so similar showing only a modest trend to smaller deficits. French exports are outpacing imports but a good deal of that is the consistent weakens of French imports.


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France's trade deficit in October edged deeper into deficit falling to -6bln Euros from -5.9bln Euros. Both exports and imports edged higher in October but imports rose just slightly faster. That slightly faster speed plus the fact of [...]

French Imports Flounder While Exports Show Surprising Strength

Tom Moeller

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The job openings rate during October ticked up to 3.3%, close to where
it's been for six months. 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 actual number of job openings surged 21.0% y/y to 4.834
million. The Bureau of Labor Statistics reports these figures in its Job
Openings &amp; Labor Turnover Survey (JOLTS).
The private-sector job openings rate recovered to 3.6% its highest level
since April 2001, up from the recession low of 1.7%. The rate in leisure &amp;
hospitality businesses was 4.7%, the highest point since May. The rate in the
professional &amp; business services industries held at 4.6% for the third
straight month and in the health care &amp; social assistance sector it remained
high at 4.1%. The 3.1% rate in trade, transportation &amp; utilities industries
was up from the recession low of 1.2%. The 2.3% rate in the factory sector was
down after five months at 2.4%. The construction rate improved to 2.2%. The job
openings rate in the government sector fell m/m to 1.8%, its lowest level since
March..
The hires rate held at its cycle high of 3.6%. The hires rate is
the number of hires during the month divided by employment. The private
sector hires rate slipped to 4.1%. Amongst leisure &amp; hospitality firms the
rate held at 6.0%. The rate in professional &amp; business services retreated to
5.6% but in construction it improved to 5.0%. The hiring rate in education
slipped to 2.8% but in the factory sector it held at 2.3%. In the government
sector the hiring rate held at a low 1.4%. 
The number of hires slipped 0.4% m/m but increased 12.0% y/y. Private sector
hires rose 12.2% y/y. Professional &amp; business services hiring increased 21.8%
y/y and factory sector employment grew 20.1% y/y. Trade, transportation &amp;
utilities jobs rose 18.3% y/y. Hiring in the health care &amp; social assistance
sector improved 13.4% y/y and leisure &amp; hospitality sector employment
increased 8.6%. Government hiring rose 8.9% y/y.
The job separations rate jumped to 3.5% and the actual number of separations
increased 12.1% y/y. Separations include quits, layoffs, discharges, and
other separations as well as retirements. The private sector separations
rate held at 3.8%, while the government sector's rate inched remained at 1.4%.
The layoff &amp; discharge rate held near the record low of 1.2%. The
private sector layoff rate inched up m/m to 1.4% and the government's rate was
steady at 0.4%.
The JOLTS survey dates to December 2000 and the figures are available
in Haver's USECON database.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS
 (Job Openings &amp; Labor Turnover Survey, SA)</a></th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Oct.'13</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 </tr>
 </thead>
 <tbody>
 <tr class="grey3">
 <td class="firstcol" colspan="8" >Job Openings, Total</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;Rate (%)</td>
 <td>3.3</td>
 <td>3.2</td>
 <td>3.4</td>
 <td>2.8</td>
 <td>2.8</td>
 <td>2.6</td>
 <td>2.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;Total (000s)</td>
 <td>4,834</td>
 <td>4,685</td>
 <td>4,853</td>
 <td>21.0%</td>
 <td>7.4%</td>
 <td>3.1%</td>
 <td>22.4%</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colspan="8" >Hires, Total</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;Rate (%)</td>
 <td>3.6</td>
 <td>3.6</td>
 <td>3.4</td>
 <td>3.4</td>
 <td>39.6</td>
 <td>38.8</td>
 <td>38.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;Total (000s)</td>
 <td>5,055</td>
 <td>5,075</td>
 <td>4,742</td>
 <td>12.0%</td>
 <td>3.3%</td>
 <td>4.2%</td>
 <td>3.0%</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colspan="8" >Layoffs &amp; Discharges,
 Total</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;Rate (%)</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.1</td>
 <td>14.6</td>
 <td>15.5</td>
 <td>15.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;Total (000s)</td>
 <td>2.8%</td>
 <td>2.1%</td>
 <td>-6.2%</td>
 <td>9.9%</td>
 <td>-4.6%</td>
 <td>1.2%</td>
 <td>-4.8%</td>
 </tr>
 </tbody>
</table>
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The job openings rate during October ticked up to 3.3%, close to where it's been for six months. 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 [...]

U.S. JOLTS: Job Openings Rate Improves as Hiring Remains Firm

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The National Federation of Independent Business reported that its Small
Business Optimism Index for November improved to 98.1 following an unrevised
gain to 96.1 during October. The latest level was the highest since February
2007.
Improvement in the component series versus October included the percentage of
firms expecting higher real sales. The percentage planning to increase
employment rose to its highest level since July but the percentage indicating
few or no qualified applicants for job positions remained near its cycle high.&nbsp;

The percentage of companies indicated that now was a good time to expand the
business held near its recovery peak. The percentage indicating that credit was
harder to get ticked up m/m but remained near the lowest level since 2006. The
percentage planning to add to inventories slipped versus its recent high as did
the percentage planning capital expenditures.
On the pricing front, the percentage of firms raising prices returned to the
lowest level in nine months. The percentage planning price increases ticked
lower. Labor's pricing power firmed somewhat. The percentage of firms raising
worker compensation gained to its highest point in three months. The percentage
planning to raise compensation returned to its highest since March 2008.
The most important problems faced by small business were taxes (23%),
government requirements (22%), poor sales (12%), quality of labor (10%),
competition from large businesses (8%), insurance cost &amp; availability (7%),
cost of labor (5%), inflation (3%) and financial &amp; interest rates (3%).
Roughly 24 million small businesses exist in the U.S. and they create 80% of
all new jobs. The typical NFIB member employs 10 people and reports gross sales
of about $500,000 a year. The NFIB figures can be found in Haver's SURVEYS
database.

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 <th class="firstcol" scope="col" >National Federation of
 Independent Business</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov'13</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Small Business Optimism Index (SA,
 1986=100)</td>
 <td >98.1</td>
 <td >96.1</td>
 <td >95.3</td>
 <td >92.5</td>
 <td >92.4</td>
 <td >92.2</td>
 <td >91.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Firms Expecting Higher Real Sales In Six
 Months (SA, Net %)</td>
 <td >14</td>
 <td >9</td>
 <td >5</td>
 <td >3</td>
 <td >4</td>
 <td >2</td>
 <td >3</td>
 </tr>
 <tr>
 <td class="firstcol" >Firms Expecting Economy To Improve (SA,
 Net %)</td>
 <td >13</td>
 <td >-3</td>
 <td >-2</td>
 <td >-20</td>
 <td >-15</td>
 <td >-9</td>
 <td >-9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Firms Planning to Increase Employment
 (SA, Net %)</td>
 <td >11</td>
 <td >10</td>
 <td >9</td>
 <td >9</td>
 <td >6</td>
 <td >4</td>
 <td >3</td>
 </tr>
 <tr>
 <td class="firstcol" >Firms With Few or No Qualified
 Applicants For Job Openings (SA, %)</td>
 <td >45</td>
 <td >45</td>
 <td >42</td>
 <td >44</td>
 <td >39</td>
 <td >35</td>
 <td >32</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Firms Reporting That Credit Was Harder
 To Get (SA, Net %)</td>
 <td >5</td>
 <td >4</td>
 <td >7</td>
 <td >6</td>
 <td >6</td>
 <td >8</td>
 <td >10</td>
 </tr>
 <tr>
 <td class="firstcol" >Firms Raising Average Selling Prices
 (SA, Net %)</td>
 <td >4</td>
 <td >8</td>
 <td >4</td>
 <td >2</td>
 <td >2</td>
 <td >4</td>
 <td >5</td>
 </tr>
 </tbody>
</table>



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The National Federation of Independent Business reported that its Small Business Optimism Index for November improved to 98.1 following an unrevised gain to 96.1 during October. The latest level was the highest since February 2007. [...]

U.S. Small Business Optimism Jumps to New High

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The OECD LEI in October signals weakness for most of the OECD reporting countries. The LEI readings are below 100 in October for Japan, China, Austria, Denmark and Germany. These weak readings point to lees than trend growth. 

In addition The UK, EMU, and Japan show October LEI readings that are below their 6-month ago levels, signaling a slowdown. 

Within EMU slowdowns are signaled for Austria, Belgium, Denmark, Finland, Germany and Italy. Over the previous six months (as of April) all of the EMU nations had been signaling an expansion as the LEI's were all above their six month ago levels. Things have changed.

Last week the Bundesbank downgraded its outlook for the Germany Economy on the same day as German industrial orders accelerated. Today German industrial output underperformed expectations. Over the weekend Angela Merkel was critical of the austerity steps taken by France and Italy. On Monday Germany was trying to undo that damage lauding France and Italy for their efforts. Still, Italy was downgraded by S&P late last week to a rating of just above junk. No matter how puny Italy's and France's efforts seem, their economies are not in good shape they are finding it hard to take stronger steps toward meeting EMU financial obligations. And they are not alone. Belgium is suffering strikes as its people protest austerity there, in a country that is solidly in the core of the euro-Zone. 

Germany is having its outlook downgraded but it is still the best performing economy in Europe. Yet Germans remain uneasy with the state of fiscal policy throughout the Eurozone and have taken this opportunity to become more fiscally fit themselves. Meanwhile, the ECB is not getting a go-ahead to implement a program of greater monetary ease. Everyone is watching and waiting. 

The elaboration over the weekend by Russian President Vladimir Putin of the State of Russia and his plan to deal with it suggests that Russia is suffering under a more draconian set back than Europe Economic sanctions are biting hard in Russia. Putin has announced the extent of austerity and it would appear to involve a substantial run off of Russia's foreign exchange reserves and further clamp down on wages and living standards there. 

Additional news today showed a higher Chinese trade surplus as exports slowed and imports contracted. China seems to be under even stronger contractionary pressures that it seemed to be suffering from a short time ago when its leader proclaimed that all was in hand. Suddenly, trouble seems underfoot. 

In today's markets Europe is still reeling from a down grade of Italy to a level just above junk status. But there are hopes that the strong U.S. job report from Friday for November is a signal of accelerating U.S. growth. Yet U.S, income growth has still not shown itself to be strong. The rise in the U.S. economy may not have strength enough to offset the weakness we are seeing throughout the global economy. The Friday U.S. jobs report showed that average hourly earnings gains did not trickle down to accelerate for production workers. Consumer attitudes in the U.S. are improving but slowly. It is far from clear the OECD leading indicators for the U.S. support that degree of optimism. The U.S leading index ratio to six months ago is only at 100.1 while the ratio from six months ago was below 100. Growth in the US has been without a substantial upward kick to momentum for some time. 

Of course, there is hope that lower energy prices will revitalize global demand. Europe is an energy importer so lower prices will have substantial effect there. However, since taxes are larger as share of prices consumers pay, the impact on consumers will not be a great as in the US. But the US is also a producer and will experiences some negative effects on the production side. Those negative effects are not yet apparent among U.S. producers. Nor is there evidence of weaker U.S. exports in the wake of a rising dollar and limping growth overseas. For now the trend for Europe is negative and the hopes for the U.S are high as data from Asia for China and Japan continue to show unexpected weakness. It's not the best of circumstances as we head for the holiday season.



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The OECD LEI in October signals weakness for most of the OECD reporting countries. The LEI readings are below 100 in October for Japan, China, Austria, Denmark and Germany. These weak readings point to lees than trend growth. In [...]

OECD LEIs Tell Unsettling Story

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 The National Association for Business Economics continues to
forecast improvement in U.S. real economic activity. Expectations were
little-changed from September for 3.1% real GDP growth in 2015 and 2.2% for this
year. Quarterly growth is expected to hold fairly steady at 3.0%. Expected personal
consumption expenditures growth was roughly unchanged at a moderate 2.7%, its
quickest growth rate since 2006. Growth in business investment in equipment
&amp; software is expected to remain firm at 4.3% while growth in spending on
nonresidential structures may slip a bit to 5.5%. Residential investment should
continue to be the economy's strongest sector with a lessened 7.0% increase
forecast in 2015 after a 1.7% rise this year. The rate of inventory investment
should diminish next year after remaining little-changed 2014 gain. Real net
exports are expected to deteriorate slightly.
Forecasts for housing starts again were little-changed at 1.15 million in
2015 following 1.00 million this year while expectations for light vehicle sales
were unchanged at 16.8 million after an expected 16.4 million in 2014.
Forecasted average monthly gains in payroll employment were little-changed at 217,000
next year after 226,000 this year. The unemployment rate forecast average was
lessened to 5.6% next year after 6.2% this year. The forecast for consumer price
inflation was lowered to 1.7% for next year from 2.1% expected earlier.
The forecasted 3.20% interest rate on 10-year Treasury notes at the end of
next year is lower than projected earlier and compares to a downwardly revised
estimate of 2.50% at the end of this year. The Fed is expected to raise rates in
the third quarter of 2015, pushed back from the earlier forecast of a Q2
increase. The forecasted 6.7% gain in corporate profits next year, following
4.7% growth this year, was little-changed. The Federal government budget deficit
is expected to shrink to a lessened $460 billion in 2015, roughly one-third its
$1.4 trillion peak in 2009.
The figures from the latest NABE report can be found in Haver's SURVEYS
database. 
 
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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

<thead>
 <tr>
 <th class="firstcol" scope="col"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">National
 Association For Business Economics</a></th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol">Real GDP (% Chg. SAAR)</td>
 <td >3.1</td>
 <td >2.2</td>
 <td >2.2</td>
 <td >2.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Personal Consumption
 Expenditures</td>
 <td >2.7</td>
 <td >2.2</td>
 <td >2.4</td>
 <td >1.8</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Nonresidential Structures</td>
 <td >5.5</td>
 <td >7.9</td>
 <td >-0.5</td>
 <td >13.1</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp; Nonresidential Equipment &amp;
 Software</td>
 <td >4.3</td>
 <td >3.9</td>
 <td >4.6</td>
 <td >6.8</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;&nbsp;Residential Investment</td>
 <td >7.0</td>
 <td >1.7</td>
 <td >11.9</td>
 <td >13.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Change in Real Business
 Inventories (Bil. $)</td>
 <td >57.8</td>
 <td >62.0</td>
 <td >63.5</td>
 <td >57.0</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;&nbsp;Real Net Exports (Bil. $)</td>
 <td >-438.0</td>
 <td >-433.4</td>
 <td >-420.4</td>
 <td >-452.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Housing Starts (Mil. Units)</td>
 <td >1.15</td>
 <td >1.00</td>
 <td >0.92</td>
 <td >0.78</td>
 </tr>
 <tr>
 <td class="firstcol">Light Vehicle Sales (Mil. Units)</td>
 <td >16.8</td>
 <td >16.4</td>
 <td >15.5</td>
 <td >14.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Payroll Employment Average Monthly
 Change (000s)</td>
 <td >217</td>
 <td >226</td>
 <td >194</td>
 <td >186</td>
 </tr>
 <tr>
 <td class="firstcol">Unemployment Rate (%)</td>
 <td >5.6</td>
 <td >6.2</td>
 <td >7.4</td>
 <td >8.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Consumer Price Index (Y/Y %)</td>
 <td >1.7</td>
 <td >1.7</td>
 <td >1.5</td>
 <td >2.1</td>
 </tr>
 <tr>
 <td class="firstcol">Fed Funds Rate (%, Year End)</td>
 <td >0.75</td>
 <td >0.125</td>
 <td >0.125</td>
 <td >0.125</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">10-Year Treasury Note (%, Year End)</td>
 <td >3.20</td>
 <td >2.50</td>
 <td >3.04</td>
 <td >1.78</td>
 </tr>

 </tbody> 
 </table>
 
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The National Association for Business Economics continues to forecast improvement in U.S. real economic activity. Expectations were little-changed from September for 3.1% real GDP growth in 2015 and 2.2% for this year. Quarterly [...]

NABE Maintains Forecast of Improving Economic Growth

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 Nonfarm payrolls surged 321,000 during November (2.0% y/y) following
 upwardly revised increases of 243,000 and 271,000 during the prior two
 months. The gain outpaced expectations for a 225,000 rise in the Action
 Economics Forecast Survey. The unemployment rate held at 5.8%, its lowest
 level since July 2008. Expectations had been for 5.9%. The overall jobless
 rate, including workers who were marginally attached and those employed
 part-time for economic reasons, slipped to 11.4%.
 From the payroll jobs survey, the 321,000 increase in employment
 (2.0% y/y) was the largest gain since January 2012. Job growth improved
 across industry categories. Factory sector employment rose 28,000 (1.4%
 y/y), its strongest rise in twelve months and driven by the nondurable
 goods sector. Construction sector jobs increased 20,000 (3.6% y/y), the
 best gain in three months. Private service-producing industries produced
 an outsized 266,000 improvement (2.3% y/y), the quickest hiring pace since
 January 2012. Professional &amp; business services jobs jumped 86,000
 (3.7% y/y), helped by a firm 22,700 rise (8.5% y/y) in temporary help.
 Trade, transportation &amp; utilities employment gained 71,000 (2.1% y/y)
 and retail service sector jobs advanced 50,200 (1.9% y/y), boosted by a
 6,400 rise (9.1% y/y) in nonstore jobs. Hiring in health care &amp; social
 services gained 37,200 (2.0% y/y) and leisure &amp; hospitality employment
 increased 32,000 (2.6% y/y). Jobs in transportation &amp; warehousing rose
 16,7000 (3.1% y/y) and financial industries employment grew an improved
 20,000 (1.4% y/y). Information sector hiring gained 4,000 (0.1% y/y).
 In the government sector, payrolls grew a steady
 7,000 (0.4% y/y). Federal government employment rose 5,000 (-0.7% y/y),
 state government jobs gained 3,000 (0.4% y/y) but local government hiring
 slipped 1,000 (0.5% y/y).
 Hiring was broadly based last month as indicated by a one-month
 diffusion index of 69.7%, its highest since January 1998. Over three
 months, 70.6% of industries added jobs. In the factory sector, 63.0% of
 industries raised employment but over three months, 69.1% added jobs, the
 most since December. 
 Average weekly hours-worked rose to 34.6, the
 highest level since May 2008. The factory sector workweek extended to 41.1
 hours, the longest of the recovery, but the construction sector workweek
 dipped to 39.1 hours. The private service sector workweek held steady at
 33.4 hours. Aggregate hours worked (employment times hours) rose 0.6%
 (2.6% y/y). For Q4, aggregate hours rose 2.8% (AR) from Q3 following a
 2.4% rise during that quarter. During the last ten years there has been a
 68% correlation between the q/q rise in aggregate hours and the change in
 real GDP. 
 Average hourly earnings gained 0.4% (2.1% y/y),
 the strongest rise since April 2013. The gain was driven by a 0.4%
 improvement (2.1% y/y) in service sector earnings. Construction sector
 earnings gained 0.2% (2.7% y/y) and factory sector earnings gained 0.1%
 (1.5% y/y).
 The household employment survey indicated
 that the unemployment rate held at 5.8%. Employment increased 4,000 (2.0%
 y/y) while unemployment rose 115,000 (-16.0% y/y). The labor force rose
 119,000 (0.7% y/y). The population rose 0.9% y/y, leaving the labor force
 participation rate of 62.8% stable m/m and near its lowest level since
 1977. 
 For individuals with less than a high school
 diploma, the unemployment rate was 8.4% and for high school graduates but
 no college, it was 5.6%. For those with some college, the jobless rate was
 4.9% while for college graduates the unemployment rate was 3.2%.
 The figures referenced above are available in Haver's USECON
 database. Additional detail can be found in the LABOR and in the EMPL
 databases. The expectation figures are from Action Economics and are in
 the AS1REPNA database.
 <table class="centered" width="1871" border="0" cellspacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="973">Employment: (M/M
 Chg., 000s)</th>
 <th scope="col" width="127">Nov</th>
 <th scope="col" width="127">Oct</th>
 <th scope="col" width="128">Sep</th>
 <th scope="col" width="128">Y/Y</th>
 <th scope="col" width="128">2013</th>
 <th scope="col" width="128">2012</th>
 <th scope="col" width="128">2011</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="973">Payroll Employment</td>
 <td align="center" width="127">321</td>
 <td align="center" width="127">243</td>
 <td align="center" width="128">271</td>
 <td align="center" width="128">2.0%</td>
 <td align="center" width="128">1.7%</td>
 <td align="center" width="128">1.7%</td>
 <td align="center" width="128">1.2%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="973">&nbsp;Previous</td>
 <td align="center" width="127">--</td>
 <td align="center" width="127">214</td>
 <td align="center" width="128">256</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr>
 <td class="firstcol" width="973">&nbsp;Manufacturing</td>
 <td align="center" width="127">28</td>
 <td align="center" width="127">20</td>
 <td align="center" width="128">12</td>
 <td align="center" width="128">1.4</td>
 <td align="center" width="128">0.7</td>
 <td align="center" width="128">1.7</td>
 <td align="center" width="128">1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="973">&nbsp;Construction</td>
 <td align="center" width="127">20</td>
 <td align="center" width="127">7</td>
 <td align="center" width="128">18</td>
 <td align="center" width="128">3.6</td>
 <td align="center" width="128">3.3</td>
 <td align="center" width="128">2.1</td>
 <td align="center" width="128">0.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="973">&nbsp;Private Service Producing</td>
 <td align="center" width="127">266</td>
 <td align="center" width="127">208</td>
 <td align="center" width="128">213</td>
 <td align="center" width="128">2.3</td>
 <td align="center" width="128">2.2</td>
 <td align="center" width="128">2.2</td>
 <td align="center" width="128">1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="973">&nbsp;Government</td>
 <td align="center" width="127">7</td>
 <td align="center" width="127">7</td>
 <td align="center" width="128">22</td>
 <td align="center" width="128">0.4</td>
 <td align="center" width="128">-0.3</td>
 <td align="center" width="128">-0.8</td>
 <td align="center" width="128">-1.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="973">Average Weekly Hours - Private
 Sector</td>
 <td align="center" width="127">34.6</td>
 <td align="center" width="127">34.5</td>
 <td align="center" width="128">34.5</td>
 <td align="center" width="128">34.5 
 (Nov.'13)</td>
 <td align="center" width="128">34.5</td>
 <td align="center" width="128">34.4</td>
 <td align="center" width="128">34.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="973">Private Sector Average Hourly
 Earnings (%)</td>
 <td align="center" width="127">0.4</td>
 <td align="center" width="127">0.1</td>
 <td align="center" width="128">0.0</td>
 <td align="center" width="128">2.1</td>
 <td align="center" width="128">2.1</td>
 <td align="center" width="128">1.9</td>
 <td align="center" width="128">2.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="973">Unemployment Rate (%)</td>
 <td align="center" width="127">5.8</td>
 <td align="center" width="127">5.8</td>
 <td align="center" width="128">5.9</td>
 <td align="center" width="128">7.0 
 (Nov.'13)</td>
 <td align="center" width="128">7.4</td>
 <td align="center" width="128">8.1</td>
 <td align="center" width="128">8.9</td>
 </tr>
 </tbody>
 </table>
 
 
 

<div id="footer" class="sprites">
</div>
&nbsp;
U.S. Factory Sector Orders Decline As Petroleum
Prices Fall 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
5, 2014
New orders to all manufacturers fell 0.7% (+2.1% y/y) during October
following a 0.5% decline. No change in orders was expected in the Action
Economics Forecast Survey. Orders for nondurable goods (which equal shipments)
declined 1.5% (-1.1% y/y) as the value of&nbsp; petroleum shipments fell 6.3%
(-9.3% y/y) due to lower prices. Chemical shipments also fell 1.1% (-2.2% y/y).
To the upside, apparel shipments rose 3.0% (11.3% y/y) and food product
shipments gained 1.2% (7.5% y/y). Shipments of durables ticked 0.1% higher (5.7%
y/y). Transportation equipment shipments gained 0.8% (3.8% y/y), led by a 2.6%
rise in heavy duty trucks. New orders for durable goods rose 0.3% (5.5% y/y),
initially reported as 0.4%. Transportation equipment orders rose 3.4% (3.9% y/y)
but machinery orders fell 1.4% (+6.0 y/y). 
Unfilled orders increased 0.4% (12.3% y/y) for the second month while order
backlogs excluding the transportation sector rose 0.4% (6.9% y/y). Electrical
equipment backlogs rose 1.4% (14.3% y/y) and unfilled orders of computers &amp;
electronic products gained 0.7% (6.9% y/y). Unfilled orders of furniture
improved 0.9% (12.2% y/y) but machinery backlogs slipped 0.4% (+10.9% y/y).
Inventories in the factory sector ticked 0.1% higher (3.5% y/y). In the
durable goods sector, inventories rose 0.5% (6.0% y/y). Primary metals
inventories gained 0.9% (8.1% y/y) but electrical equipment inventories
retreated 1.2% (-3.8% y/y). Amongst nondurable goods industries, inventories
declined 0.5% (-0.2% y/y). Petroleum inventories dropped 3.6% (-9.0% y/y), basic
chemicals slipped 0.1% (+0.7% y/y) but apparel inventories rose 3.1% (25.3%
y/y).
The factory sector figures are available in Haver's USECON database.
<table class="centered" width="1871" border="0" cellspacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="1029">Factory Sector- NAICS
 Classification (%)</th>
 <th scope="col" width="119">Oct</th>
 <th scope="col" width="119">Sep</th>
 <th scope="col" width="120">Aug</th>
 <th scope="col" width="120">Y/Y</th>
 <th scope="col" width="120">2013</th>
 <th scope="col" width="120">2012</th>
 <th scope="col" width="120">2011</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1029">New Orders</td>
 <td align="center" width="119">-0.7</td>
 <td align="center" width="119">-0.5</td>
 <td align="center" width="120">-10.0</td>
 <td align="center" width="120">2.1</td>
 <td align="center" width="120">2.7</td>
 <td align="center" width="120">2.9</td>
 <td align="center" width="120">12.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1029">Shipments</td>
 <td align="center" width="119">-0.8</td>
 <td align="center" width="119">0.1</td>
 <td align="center" width="120">-1.1</td>
 <td align="center" width="120">2.2</td>
 <td align="center" width="120">2.0</td>
 <td align="center" width="120">4.0</td>
 <td align="center" width="120">12.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="1029">Inventories</td>
 <td align="center" width="119">0.1</td>
 <td align="center" width="119">0.2</td>
 <td align="center" width="120">0.1</td>
 <td align="center" width="120">3.5</td>
 <td align="center" width="120">2.3</td>
 <td align="center" width="120">2.4</td>
 <td align="center" width="120">10.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1029">Unfilled Orders</td>
 <td align="center" width="119">0.4</td>
 <td align="center" width="119">0.4</td>
 <td align="center" width="120">0.6</td>
 <td align="center" width="120">12.3</td>
 <td align="center" width="120">7.0</td>
 <td align="center" width="120">3.7</td>
 <td align="center" width="120">10.0</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Consumer Credit Usage Tapers Off 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
5, 2014
Consumer credit outstanding increased $13.2 during October (6.7% y/y)
following a revised $15.4 billion September rise, initially reported as $15.9 billion.
It was the slowest rate of gain since December. Expectations were for a $16.5 billion increase, according to the Action
Economics Forecast Survey. During the last ten years, there has been a 54%
correlation between the y/y growth in consumer credit and the y/y growth in
personal consumption expenditures.
Usage of non-revolving credit eased to $12.3 billion (8.1% y/y), the weakest
rise this year. Federal government loans increased 15.6% y/y. These constitute
roughly one-third of total non-revolving credit. Finance company lending (27% of
the total) edged 0.3% higher y/y. Bank borrowing (26% of the total) rose 6.9%
y/y and borrowing at credit unions (10% of the total) advanced 13.1% y/y.
Nonprofit &amp; educational institution loans (3% of the total) declined 9.0%
y/y. Nonfinancial business loans (1% of the total) were unchanged y/y.
Revolving credit outstanding improved $0.9 billion (3.1% y/y). Commercial bank &amp; savings
institution lending (81% of the total) increased 4.6% y/y. Finance company
balances (8% of the total) declined 8.9% y/y while borrowing from credit unions
(5% of the total) gained 8.1% y/y. Nonfinancial business accounts (3% of the
total) remained unchanged y/y and securitized credit card balances (4% of the
total) fell 5.0% y/y.
These Federal Reserve Board figures are break-adjusted and calculated by
Haver Analytics. There is a break in the credit outstanding data from November
2010 to December 2010 due to the Fed's benchmarking process. Benchmark estimates
are based on the Census of Finance Companies (CFC) and the Survey of Finance
Companies (SFC) conducted in 2010 and 2011, respectively. The consumer credit
data are available in Haver's USECON database. The Action Economics
figures are contained in the AS1REPNA database.
<table class="centered" width="1871" border="0" cellspacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="943">Consumer Credit
 Outstanding (M/M Chg, SA)</th>
 <th scope="col" width="132">Oct</th>
 <th scope="col" width="132">Sep</th>
 <th scope="col" width="132">Aug</th>
 <th scope="col" width="132">Y/Y</th>
 <th scope="col" width="132">2013</th>
 <th scope="col" width="132">2012</th>
 <th scope="col" width="132">2011</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="943">Total</td>
 <td align="center" width="132">$13.2 bil.</td>
 <td align="center" width="132">$15.4 bil.</td>
 <td align="center" width="132">$13.6 bil.</td>
 <td align="center" width="132">6.7%</td>
 <td align="center" width="132">6.0%</td>
 <td align="center" width="132">6.1%</td>
 <td align="center" width="132">4.1%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="943">&nbsp; &nbsp;Revolving</td>
 <td align="center" width="132">0.9</td>
 <td align="center" width="132">1.4</td>
 <td align="center" width="132">-0.3</td>
 <td align="center" width="132">3.1</td>
 <td align="center" width="132">1.3</td>
 <td align="center" width="132">0.6</td>
 <td align="center" width="132">0.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="943">&nbsp; &nbsp;Nonrevolving</td>
 <td align="center" width="132">12.3</td>
 <td align="center" width="132">14.0</td>
 <td align="center" width="132">13.8</td>
 <td align="center" width="132">8.1</td>
 <td align="center" width="132">7.9</td>
 <td align="center" width="132">8.5</td>
 <td align="center" width="132">5.9</td>
 </tr>
 </tbody>
</table>





</html>

Nonfarm payrolls surged 321,000 during November (2.0% y/y) following upwardly revised increases of 243,000 and 271,000 during the prior two months. The gain outpaced expectations for a 225,000 rise in the Action Economics Forecast [...]

U.S. Payrolls Jump; Unemployment Rate Remains At 2008 Low

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</head>
<body>
	 
 
 
 
 
 <a href="/comment/141205r_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/141205r.png" align="left"></a>
 
 Consumer credit outstanding increased $13.2 during October (6.7% y/y)
following a revised $15.4 billion September rise, initially reported as $15.9 billion.
It was the slowest rate of gain since December. Expectations were for a $16.5 billion increase, according to the Action
Economics Forecast Survey. During the last ten years, there has been a 54%
correlation between the y/y growth in consumer credit and the y/y growth in
personal consumption expenditures.
Usage of non-revolving credit eased to $12.3 billion (8.1% y/y), the weakest
rise this year. Federal government loans increased 15.6% y/y. These constitute
roughly one-third of total non-revolving credit. Finance company lending (27% of
the total) edged 0.3% higher y/y. Bank borrowing (26% of the total) rose 6.9%
y/y and borrowing at credit unions (10% of the total) advanced 13.1% y/y.
Nonprofit &amp; educational institution loans (3% of the total) declined 9.0%
y/y. Nonfinancial business loans (1% of the total) were unchanged y/y.
Revolving credit outstanding improved $0.9 billion (3.1% y/y). Commercial bank &amp; savings
institution lending (81% of the total) increased 4.6% y/y. Finance company
balances (8% of the total) declined 8.9% y/y while borrowing from credit unions
(5% of the total) gained 8.1% y/y. Nonfinancial business accounts (3% of the
total) remained unchanged y/y and securitized credit card balances (4% of the
total) fell 5.0% y/y.
These Federal Reserve Board figures are break-adjusted and calculated by
Haver Analytics. There is a break in the credit outstanding data from November
2010 to December 2010 due to the Fed's benchmarking process. Benchmark estimates
are based on the Census of Finance Companies (CFC) and the Survey of Finance
Companies (SFC) conducted in 2010 and 2011, respectively. The consumer credit
data are available in Haver's USECON database. The Action Economics
figures are contained in the AS1REPNA database. 
 
 <a href="/comment/141205s_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/141205s.png"></a>
 <a href="/comment/141205t_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/141205t.png"></a> 

 
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Consumer Credit
 Outstanding (M/M Chg, SA)</th>
 <th scope="col">Oct</th>
 <th scope="col">Sep</th>
 <th scope="col">Aug</th>
 <th scope="col">Y/Y</th>
 <th scope="col">2013</th>
 <th scope="col">2012</th>
 <th scope="col">2011</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td>$13.2 bil.</td>
 <td>$15.4 bil.</td>
 <td>$13.6 bil.</td>
 <td>6.7%</td>
 <td>6.0%</td>
 <td>6.1%</td>
 <td>4.1%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; &nbsp;Revolving</td>
 <td>0.9</td>
 <td>1.4</td>
 <td>-0.3</td>
 <td>3.1</td>
 <td>1.3</td>
 <td>0.6</td>
 <td>0.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;Nonrevolving</td>
 <td>12.3</td>
 <td>14.0</td>
 <td>13.8</td>
 <td>8.1</td>
 <td>7.9</td>
 <td>8.5</td>
 <td>5.9</td>
 </tr>
 </tbody> 
 </table>
 
</body></html>

Consumer credit outstanding increased $13.2 during October (6.7% y/y) following a revised $15.4 billion September rise, initially reported as $15.9 billion. It was the slowest rate of gain since December. Expectations were for a $16.5 [...]

U.S. Consumer Credit Usage Tapers Off

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<html><head>
</head>
<body>
	 
 
 
 
 
 <a href="/comment/141205m_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/141205m.png"></a>
 <a href="/comment/141205n_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/141205n.png"></a>
New orders to all manufacturers fell 0.7% (+2.1% y/y) during October
following a 0.5% decline. No change in orders was expected in the Action
Economics Forecast Survey. Orders for nondurable goods (which equal shipments)
declined 1.5% (-1.1% y/y) as the value of&nbsp; petroleum shipments fell 6.3%
(-9.3% y/y) due to lower prices. Chemical shipments also fell 1.1% (-2.2% y/y).
To the upside, apparel shipments rose 3.0% (11.3% y/y) and food product
shipments gained 1.2% (7.5% y/y). Shipments of durables ticked 0.1% higher (5.7%
y/y). Transportation equipment shipments gained 0.8% (3.8% y/y), led by a 2.6%
rise in heavy duty trucks. New orders for durable goods rose 0.3% (5.5% y/y),
initially reported as 0.4%. Transportation equipment orders rose 3.4% (3.9% y/y)
but machinery orders fell 1.4% (+6.0 y/y). 
Unfilled orders increased 0.4% (12.3% y/y) for the second month while order
backlogs excluding the transportation sector rose 0.4% (6.9% y/y). Electrical
equipment backlogs rose 1.4% (14.3% y/y) and unfilled orders of computers &amp;
electronic products gained 0.7% (6.9% y/y). Unfilled orders of furniture
improved 0.9% (12.2% y/y) but machinery backlogs slipped 0.4% (+10.9% y/y).
Inventories in the factory sector ticked 0.1% higher (3.5% y/y). In the
durable goods sector, inventories rose 0.5% (6.0% y/y). Primary metals
inventories gained 0.9% (8.1% y/y) but electrical equipment inventories
retreated 1.2% (-3.8% y/y). Amongst nondurable goods industries, inventories
declined 0.5% (-0.2% y/y). Petroleum inventories dropped 3.6% (-9.0% y/y), basic
chemicals slipped 0.1% (+0.7% y/y) but apparel inventories rose 3.1% (25.3%
y/y).
The factory sector figures are available in Haver's USECON database.


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 <a href="/comment/141205p_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/141205p.png"></a>
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>

 <tr>
 <th class="firstcol" scope="col" >Factory Sector- NAICS
 Classification (%)</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >New Orders</td>
 <td >-0.7</td>
 <td >-0.5</td>
 <td >-10.0</td>
 <td >2.1</td>
 <td >2.7</td>
 <td >2.9</td>
 <td >12.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Shipments</td>
 <td >-0.8</td>
 <td >0.1</td>
 <td >-1.1</td>
 <td >2.2</td>
 <td >2.0</td>
 <td >4.0</td>
 <td >12.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td >0.1</td>
 <td >0.2</td>
 <td >0.1</td>
 <td >3.5</td>
 <td >2.3</td>
 <td >2.4</td>
 <td >10.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Unfilled Orders</td>
 <td >0.4</td>
 <td >0.4</td>
 <td >0.6</td>
 <td >12.3</td>
 <td >7.0</td>
 <td >3.7</td>
 <td >10.0</td>
 </tr>
 
 </tbody>
 </table>
 
</body></html>

New orders to all manufacturers fell 0.7% (+2.1% y/y) during October following a 0.5% decline. No change in orders was expected in the Action Economics Forecast Survey. Orders for nondurable goods (which equal shipments) declined 1.5% [...]

U.S. Factory Sector Orders Decline As Petroleum Prices Fall

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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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.

U.S. Light Vehicle Sales Fall in April

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The ISM Purchasing Managers Index of activity in the manufacturing sector slipped to 48.7 in April from 49.0 during March and 50.3 in February. It remained up from a low of 46.9 in October of last year. A level of 50 is the break-even point between a rising and falling level of activity. The Action Economics Forecast Survey expected a reading of 47.8 for April. The series reached a monthly high of 63.8 in March 2021.

Two of the five component indexes weakened last month. The April production index fell to 44.0 after declining to 48.3 in March. It was the lowest level since May 2020. A lessened 19.8% (NSA) of respondents reported higher production while an increased 24.2% reported lower output. The inventories index declined to 50.8 last month from 53.4 in March. The index remained up from a low of 43.2 in October of last year.

Moving higher, the new orders index rose to 47.2 last month from 45.2 in March. The index remained below a January high of 55.1. Twenty-eight percent (NSA) of respondents reported higher new orders while 26.7% reported a decline. The employment index rose to 46.5 from 44.7 in March. It was below a high of 50.3 in January. A greater 13.1% (NSA) of respondents reported more hiring while a fewer 16.2% indicated less. The supplier delivery index rose to 55.2 from 53.5 in March. A higher 16.6% (NSA) of respondents reported slower delivery speeds while a fairly steady 6.2% reported a quickening.

The prices index, which is not part of the composite series, edged up to 69.8 (NSA) in April after increasing to 69.4 in March. It was the highest level since June 2022, up from a December 2022 low of 39.4. An increased 49.2% of respondents reported higher prices last month, up from 12.2% in November, while a higher 9.7% reported lower prices.

In other series, the export orders index plummeted to 43.1 in April from 49.6 during March. It was down from the high of 52.4 in January. The imports index fell sharply to 47.1 from 50.1 in March. It was the lowest reading since December 2023. The order backlog index dropped to 43.7 (NSA) last month from 44.5 in March. It was the lowest level in five months.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

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- Declines in last three months follow earlier improvement.
- Production & inventories account for m/m shortfall.
- Prices index edges up to another three-year high.

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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The value of construction put in place unexpectedly fell 0.5% m/m in March after rises of 0.6% in February (+0.7% initially) and 0.1% in January (-0.5% previously), data from the U.S. Census Bureau showed. The March reading was the first m/m fall following five straight m/m gains. A 0.3% m/m March rise had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase decelerated to 2.8% in March, the lowest since May 2019, after registering at 3.4% in February and January. The latest y/y figure was lower than 8.7% in March 2024; thus, having remained below its recent high of 9.8% in January 2024 and a peak of 18.6% in April 2022.

Private construction slid 0.6% (+2.3% y/y) in March, down for the first time since September, following increases of 0.7% in February (+0.9% initially) and 0.1% in January (-0.7% previously). Residential private construction fell 0.4% (+2.8% y/y) in March, the first m/m fall in six months, after an unrevised 1.3% gain in February. Home improvement building dropped 1.2% (+13.4% y/y), the first m/m decline since December, following a 2.3% February gain; it was 41.1% of the residential private construction. Single-family building edged up 0.1% (-0.8% y/y), the smallest of seven consecutive m/m increases, after a 0.8% February rise; it was 46.6% of the residential private construction. Meanwhile, multi-family building was essentially unchanged m/m (-12.1% y/y) in March following 15 straight m/m decreases; it was 12.3% of the residential private construction.

Nonresidential private construction fell 0.8% (+1.6% y/y) in March after a 0.1% increase in February (+0.4% initially) and a 0.1% easing in January (-0.2% previously). The March fall reflected m/m drops in the following nonresidential private constructions. These included religious (-2.9%; +16.4% y/y), health care (-2.2%; -5.2% y/y), office (-1.8%; +2.7% y/y), educational (-1.7%; -4.2% y/y), lodging (-1.6%; -1.0% y/y), commercial (-1.0%; -5.8% y/y), manufacturing (-0.4%; +3.6% y/y), communication (-0.3%; +2.2% y/y), and utilities (-0.1%; +7.0% y/y). In contrast, private constructions for amusement & recreation (1.5%; 7.0% y/y) and transportation (0.7%; 10.2% y/y) rose m/m in March.

The value of public construction declined 0.2% (+4.7% y/y) in March after holding steady in February (+0.2% initially), reflecting a 0.2% increase (-1.9% y/y) in residential public construction and a 0.2% easing (+4.8% y/y) in nonresidential public construction. The March decline reflected m/m drops in the following nonresidential public constructions. These included utilities (-4.8%; -12.8% y/y), commercial (-1.6%; +40.3% y/y), amusement & recreation (-1.0%; +19.1% y/y), educational (-0.6%; +7.6% y/y), sewage & waste disposal (-0.6%; +10.6% y/y), and health care (-0.4%; +13.0% y/y). Notably, spending on highways & streets, which made up 28.7% of public construction spending, fell 0.5% (-2.4% y/y) in March, the first m/m fall since October, following a 0.9% increase in February. To the upside, the following public constructions rose m/m in March: office (1.6%; 6.0% y/y), transportation (1.4%; 7.3% y/y), public safety (0.7%; 4.1% y/y), conservation & development (0.6%; 4.7% y/y), and water supply (0.6%; 12.2% y/y).

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

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- March construction spending -0.5% m/m; +2.8% y/y, the lowest y/y rate since May ’19.
- Residential private construction -0.4% m/m, led by a 1.2% drop in home improvement building.
- Nonresidential private construction -0.8% m/m, down for the second month in three.
- Public sector construction -0.2% m/m, reflecting a 0.2% decline in nonresidential public building.

U.S. Construction Spending Unexpectedly Drops in March, the First M/M Fall Since September

Carol Stone, CBE

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Initial claims for unemployment insurance rose 18,000 in the week ended April 26 to 241,000, seasonally adjusted.  This is higher by 16,000 than the Action Economics Forecast Survey amount of 225,000 and is the largest amount since the week of February 22. The previous week’s actual count was revised up by 1,000 to 223,000, from 222,000 reported initially.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” – in the week ended April 19 was 1.916 million, up 83,000 from the prior week’s 1.833 million; that earlier amount was revised down by 8,000.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, was 1.3% in the April 19 week, following 1.2% continuously since the week of January 6, 2024.

Economic conditions vary widely across states and territories.  In the week ended April 12, the highest unemployment rates were in New Jersey (2.39%), California (2.24%), Washington (2.19%), Rhode Island (2.17%) and Massachusetts (1.93%).  The lowest rates were in Florida (0.35%), South Dakota (0.40%), Alabama (0.41%), Virginia (0.45%) and Tennessee (0.48%).  Rates in other notable states include the Illinois (1.85%), New York (1.71%), Pennsylvania (1.54%) and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in U**SECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Actual initial claims amount is 16,000 more than forecast.
- Total beneficiaries rose by 83,000.
- Insured unemployment rate ticked up to 1.3% after 15 months at 1.2%.

Economy in Brief: 2014

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