Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090312a.jpg" align="left" border="0" height="265" width="353">
Consumer spending firmed in the last two months following the
notably soft performance during the second half of last year. During
February, retail sales excluding autos &amp; gasoline rose 0.5%
after a 1.4% January increase which was nearly double the gain reported
initially.
Overall, retail sales slipped 0.1% in February and that was
not far off expectations for a 0.5% decline. However, coupled with a
sharp upward revision to the January increase to 1.8% from 1.0%, it
left sales for the start of 2009 on a much firmer footing. Consensus
expectations had been for a decline of 0.5% in the February sales
total. The retail sales data are available in Haver's USECON
database.
The rise in total sales came despite another shortfall in
motor vehicle purchases. They fell 4.3% and that mirrored the 4.7% m/m
drop in unit sales of light vehicles which was reported last week.
Gasoline service station sales offset some of that downside surprise.
They rose 3.4% (-32.3% y/y) though the gain was boosted by the latest
increases in gas prices.
Rebounds in sales were widely evident in this month's report.
Sales at furniture, electronics &amp; appliance stores added 0.9%
to the upwardly revised 3.5% surge during January (6.1% y/y). Furniture
store sales rose for the first month since last April and posted a 0.7%
increase (-10.7% y/y). Sales of electronics &amp; appliances added
1.2% (-1.4% y/y) to their 7.5% January upward spurt.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090312b.jpg" align="right" border="0" height="265" width="353">
In the soft goods area, apparel store sales added 2.8% (-3.1%
y/y) to the upwardly revised 4.9% January gain. At general merchandise
stores, sales rose another 1.3% (2.3% y/y) on top of the unrevised 1.1%
January increase.Last year apparel store sales fell 9.9%
December-to-December and merchandise store sales slipped 0.2%.
Sales at nonstore (internet) retailers have not shared the
picture of upside surprise. They rose just 0.3% last month (-0.6% y/y)
after a 1.7% January increase which was downwardly revised. Moreover,
the interest in dining out slackened and sales fell 0.2% (+2.8% y/y)
after a 1.8% January increase.
Building materials sales continued down and posted a 0.2%
(-10.3% y/y) decline. It was the seventh consecutive monthly drop.
Detecting Recessions in the Great Moderation: A
Real-Time Analysis from the Federal Reserve Bank of
Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q08Davig.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail
Sales &amp; Food Services</a> (%)</td>
<td>-0.1</td>
<td>1.8</td>
<td>-3.1</td>
<td>-8.6</td>
<td>-0.4</td>
<td>4.2</td>
<td>5.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Autos</td>
<td>0.7</td>
<td>1.6</td>
<td>-3.2</td>
<td>-5.0</td>
<td>2.8</td>
<td>4.6</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Less Gasoline</td>
<td>0.5</td>
<td>1.4</td>
<td>-1.8</td>
<td>-0.6</td>
<td>1.8</td>
<td>4.2</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body></html>

Consumer spending firmed in the last two months following the notably soft performance during the second half of last year. During February, retail sales excluding autos & gasoline rose 0.5% after a 1.4% January increase which was [...]

U.S. Retail Sales Excluding Autos Rise; Revisions Sharply Higher

U.S. Retail Sales Excluding AutosRise; Revisions Sharply Higher

Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311g.jpg" width="353">
In the UK both export and import flows are losing momentum fast. Weak exports tell a tale of weakening growth in UK export markets. Dropping imports tell of still weakening domestic demand. Both series are quite weak and have a record of tracking one another relatively closely. The deficit in goods and services trade widened this month but the trends still seems to show a contraction phase is in train (see chart). While exports fell more steeply than imports in January, the two months of January and December taken together show much more similar behavior. 
The trade gap is currently 41% of exports which is not far from its peak ratio of nearly 45% (since 1990). The deficit is also 29% of imports which is close to its max ratio of 31%. So while the deficit has been gradually on the decline the size of the deficit relative to the trade flows is expanding, effectively increasing its burden. 
Year-over-year UK export and import values are lower by about 7% and 6% respectively. But over the recent periods we get a better taste of what is really in train. The annualized rate drop for exports is 38% over three months compared to 28% for imports. Over six months it&#146;s 31% for exports compared to 25% for imports. Obviously the unraveling has been recent and has some on with great vigor. Sterling has dropped during this period, something that should help the UK to hold its trade competitiveness. However, that makes things more difficult for exporters based in the euro-Zone, trying to penetrate the UK market and it has been the source of some UK e-Zone tensions. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
UK Trade trends for goods
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="grey3">
<td class="firstcol">Balance*</td>
<td>-&pound;&pound; 7.75</td>
<td>-&pound;&pound; 7.23</td>
<td>-&pound;&pound; 7.61</td>
<td>-&pound;&pound; 7.66</td>
<td>-&pound;&pound; 7.72</td>
</tr>
<tr class="grey2">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">All Exp</td>
<td>-4.0%</td>
<td>-1.8%</td>
<td>-37.8%</td>
<td>-31.0%</td>
<td>-6.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Capital gds</td>
<td>-6.7%</td>
<td>0.5%</td>
<td>-24.7%</td>
<td>-13.0%</td>
<td>-5.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Road Vehicles</td>
<td>-6.0%</td>
<td>-12.2%</td>
<td>-68.0%</td>
<td>-58.9%</td>
<td>-34.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Basic Materials</td>
<td>-14.6%</td>
<td>7.9%</td>
<td>-79.6%</td>
<td>-75.2%</td>
<td>-23.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food Feed Bev &amp; Tbco</td>
<td>-0.3%</td>
<td>7.3%</td>
<td>13.5%</td>
<td>5.4%</td>
<td>8.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">All IMP</td>
<td>-1.0%</td>
<td>-3.5%</td>
<td>-27.9%</td>
<td>-25.5%</td>
<td>-5.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Capital gds</td>
<td>-4.8%</td>
<td>-4.8%</td>
<td>-20.1%</td>
<td>-13.9%</td>
<td>-8.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Road Vehicles</td>
<td>-0.3%</td>
<td>-11.9%</td>
<td>-70.3%</td>
<td>-57.1%</td>
<td>-43.9%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Basic Materials</td>
<td>-15.2%</td>
<td>-4.5%</td>
<td>-61.8%</td>
<td>-53.4%</td>
<td>-30.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food Feed Bev &amp; Tbco</td>
<td>3.2%</td>
<td>-4.1%</td>
<td>14.4%</td>
<td>5.3%</td>
<td>10.9%</td>
</tr>
<tr class="grey2">
<td colspan="6">*Stg Blns; mo or period average</td>
</tr>
</tbody>
</table>
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In the UK both export and import flows are losing momentum fast. Weak exports tell a tale of weakening growth in UK export markets. Dropping imports tell of still weakening domestic demand. Both series are quite weak and have a record [...]

UK Trade Picture Show More Deterioration

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311e.jpg" align="left" border="0" height="265" width="353">
The U.S. government ran a budget deficit of $192.8 billion
during February and for the first five months of this fiscal year the
deficit swelled to $764.5B. Both figures are substantially higher than
the deficits of $175.6B last February and $264.5B for the first five
months of FY08. The latest figure came in slightly below Consensus
projections for a February deficit of $203B.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311f.jpg" align="right" border="0" height="265" width="353">
Year-to-date the budget deficit is running at roughly 5.5% of
GDP. The Congressional Budget Office's recent deficit estimate of $1.2
trillion for FY09 amounts to 8.3% of GDP. It assumes that revenues will
fall 6.6% year-to-year and that outlays will increase 19.0%.
Net revenues during February fell 17.4% from February of last
year and for the first five months of FY09 they were down 11.0% y/y.
Individual income tax receipts fell 13.1 % y/y through February
reflecting higher unemployment. Corporate tax receipts mirror the
drying up of profitability and fell by nearly one-half. Growth in
employment taxes dropped to 0.9%, the least since late 2003, and
unemployment insurance tax receipts fell 9.9%. Real estate taxes fell
6.2% after 10.5% growth last year.
Swelled by TARP, U.S. government outlays surged by 32.0% from
last fiscal year's first five months. Outlays under the Government's
Troubled Asset Relief Program (TARP) amounted to $37.8B last month and
for the first four months of the program totaled $280.3B. The U.S.
Treasury has adopted the view that these TARP expenditures should be
counted like any other spending. When the banks repay the Treasury,
these funds will be counted as revenue. Accounted for in this way, TARP
causes a surge in the budget deficit when the funds are distributed to
the banks, but leads to a smaller deficit, or perhaps a surplus, when
repayments are received.
Defense spending (19% of total outlays) rose 7.1%. Medicare
expenditures (12% of outlays) increased by 10.9% and "income security"
spending (11% of outlays) jumped 21.1% after 7.5% growth last year.
Social security payments rose a steady 7.1% but net interest payments
continued to fall by more than one-quarter with lower interest rates.
The Government's financial data are available in Haver's USECON
database, with extensive detail available in the specialized GOVFIN.
The Economic Crisis and the Fiscal Crisis: 2009 and
Beyond from Alan J. Auerbach, University of California,
Berkeley, and William G. Gale, Brookings Institution, is available <a href="http://www.taxpolicycenter.org/UploadedPDF/411843_economic_crisis.pdf">here.
</a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US
Government Finance</a> &nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2008</th>
<th scope="col">FY 2007</th>
<th scope="col">FY 2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-192.8B</td>
<td>$-86.5B</td>
<td>$-175.6B 
(2/08)</td>
<td>-$454.8B</td>
<td>-$161.5B</td>
<td>-$248.2B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$87.3B</td>
<td>$226.1B</td>
<td>-17.4%</td>
<td>-1.7%</td>
<td>6.7%</td>
<td>11.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$280.1B</td>
<td>$131.3B</td>
<td>-0.4%</td>
<td>9.1%</td>
<td>2.8%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
</body></html>

The U.S. government ran a budget deficit of $192.8 billion during February and for the first five months of this fiscal year the deficit swelled to $764.5B. Both figures are substantially higher than the deficits of $175.6B last [...]

U.S. Budget Deficit Grows Sharply With Recession & TARP

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311a.jpg" width="353">
The Bureau of Labor Statistics indicated in its January report on Job Openings &amp; Labor Turnover Survey (JOLTS) that job availability fell 7.2% from December and by more than one-third from the June 2007 peak. The latest level was a record low for the series which dates back to December 2000.
The job openings rate also fell. The January rate was down to 2.2% versus an upwardly revised 2.3% rate in December, down from more than a 3% rate in 2007. 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 in the construction and manufacturing sectors fell by roughly two-thirds from the 2007 averages. Professional &amp; business services job openings fell by one-third year-to-year while openings in the education &amp; health sectors also were weak and they fell 7.6%. Openings in retail trade fell a slight 0.3% y/y.
By region, openings in the South, the Midwest and the West were down by roughly one third year-to-year and in the Northeast they were down by one quarter.
The hires rate held steady versus December at 3.3% which was still near the lowest in the series&#39; short eight year history.The hires rate is the number of hires during the month divided by employment.The actual number of hires fell by 11.9% year-to-year. The construction sector showed a 4.3% increase versus last year but elsewhere hires were quite weak. In the factory sector, hires fell 33.5% y/y and in the professional &amp; business services sector they fell 14.8%. In the leisure and hospitality sector, hires fell 18.1% y/y. Even in the educational &amp; health sector hires fell 5.0%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311b.jpg" width="353">
The job separations rate held steady at 3.6%, about where it&#39;s been since early 2008. Separations include quits, layoffs, discharges, and other separations as well as retirements. The level of job separations fell 3.5% y/y.
The JOLTS survey dates only to December 2000 but has followed the movement in nonfarm payrolls, though the actual correlation between the two series is low.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a> and the figures are available in Haver&#39;s USECON database.
Explaining trends in wages, work and occupations from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflapril2009_261.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January &#39;08</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">Job Openings, Total&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.2</td>
<td>2.3</td>
<td>3.0</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,991</td>
<td>3,224</td>
<td>4,332</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.3</td>
<td>3.3</td>
<td>3.6</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,399</td>
<td>4,508</td>
<td>4,995</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
</tbody>
</table>
</body>
</html>

The Bureau of Labor Statistics indicated in its January report on Job Openings & Labor Turnover Survey (JOLTS) that job availability fell 7.2% from December and by more than one-third from the June 2007 peak. The latest level was a [...]

JOLTS: U.S. Job Openings Fall Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311c.jpg" width="353">
The total number of mortgage applications recovered last week after three consecutive weeks of decline, reported the Mortgage Bankers Association. The 11.3% increase nevertheless left applications 45.4% below the peak reached this past January when applications were boosted by the precipitous decline in interest rates to near the lows of 2003.
The index of applications to refinance a home mortgage recovered 13.3% last week and that reversed nearly all of the prior period&#39;s 15.3% decline. While these applications are down by one-half from their January high, the trend still is up due to the decline in interest rates.
Applications for a mortgage to purchase a home also rose last week. The 7.1% increase was enough to recover nearly all of the decline during the prior two weeks. The falloff in home sales continued, however, to pull purchase applications sharply lower. Since their peak early last year these applications are down nearly 50%.
The effective interest rate on a conventional 15-year mortgage fell week-to-week to 4.84%. That was near the lowest level since 2003 after which home sales surged. For a 30-year mortgage, rates held near their recent lows at 5.19%. Interest rates on 15- and 30-year mortgages are closely correlated (&gt;90%) with the rate on 10-year Treasury securities. For an adjustable 1-Year mortgage, the rate ticked up slightly week-to-week to 6.25% but the rate still was down sharply from the 7.07% peak reached this past Fall.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311d.jpg" width="353">
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage. Moreover, during the last ten years there has been a 61% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The figures for weekly mortgage applications are available in Haver&#39;s SURVEYW database.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
The Affordability of Homeownership to Middle-Income Americans from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q08Rappaport.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">03/06/09</th>
<th scope="col">02/27/09</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">Total Market Index</td>
<td>723.4</td>
<td>649.7</td>
<td>7.7%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>253.3</td>
<td>236.4</td>
<td>-31.3%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,470.7</td>
<td>3,063.4</td>
<td>41.8%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications recovered last week after three consecutive weeks of decline, reported the Mortgage Bankers Association. The 11.3% increase nevertheless left applications 45.4% below the peak reached this [...]

U.S. Weekly Mortgage Applications Rise

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311c.jpg" align="left" border="0" height="265" width="353">
The total number of mortgage applications recovered last week
after three consecutive weeks of decline, reported the Mortgage Bankers
Association. The 11.3% increase nevertheless left applications 45.4%
below the peak reached this past January when applications were boosted
by the precipitous decline in interest rates to near the lows of 2003.
The index of applications to refinance a home mortgage
recovered 13.3% last week and that reversed nearly all of the prior
period's 15.3% decline. While these applications are down by one-half
from their January high, the trend still is up due to the decline in
interest rates.
Applications for a mortgage to purchase a home also rose last
week. The 7.1% increase was enough to recover nearly all of the decline
during the prior two weeks. The falloff in home sales continued,
however, to pull purchase applications sharply lower. Since their peak
early last year these applications are down nearly 50%.
The effective interest rate on a conventional 15-year mortgage
fell week-to-week to 4.84%. That was near the lowest level since 2003
after which home sales surged. For a 30-year mortgage, rates held near
their recent lows at 5.19%. Interest rates on 15- and 30-year mortgages
are closely correlated (&gt;90%) with the rate on 10-year Treasury
securities. For an adjustable 1-Year mortgage, the rate ticked up
slightly week-to-week to 6.25% but the rate still was down sharply from
the 7.07% peak reached this past Fall.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311d.jpg" align="right" border="0" height="265" width="353">
During the last ten years there has been a (negative) 79%
correlation between the level of applications for purchase and the
effective interest rate on a 30-year mortgage. Moreover, during the
last ten years there has been a 61% correlation between the y/y change
in purchase applications and the change in new plus existing single
family home sales.
The figures for weekly mortgage applications are available in
Haver's SURVEYW database.
The Mortgage Bankers Association surveys between 20 to 35 of
the top lenders in the U.S. housing industry to derive its refinance,
purchase and market indexes. The weekly survey covers roughly 50% of
all U.S. residential mortgage applications processed each week by
mortgage banks, commercial banks and thrifts. Visit the Mortgage
Bankers Association site <a href="http://www.mbaa.org">here</a>.
The Affordability of Homeownership to
Middle-Income Americans from the Federal Reserve Bank
of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q08Rappaport.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">03/06/09</th>
<th scope="col">02/27/09</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">Total Market Index</td>
<td>723.4</td>
<td>649.7</td>
<td>7.7%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>253.3</td>
<td>236.4</td>
<td>-31.3%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,470.7</td>
<td>3,063.4</td>
<td>41.8%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>
JOLTS: U.S. Job Openings Fall
Further 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 11, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311a.jpg" align="left" border="0" height="265" width="353">
The Bureau of Labor Statistics indicated in its January report
on Job Openings &amp; Labor Turnover Survey (JOLTS) that job
availability fell 7.2% from December and by more than one-third from
the June 2007 peak. The latest level was a record low for the series
which dates back to December 2000.
The job openings rate also fell. The
January rate was down to 2.2% versus an upwardly revised 2.3% rate in
December, down from more than a 3% rate in 2007. 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 in the construction and
manufacturing sectors fell by roughly two-thirds from the 2007 averages. Professional &amp; business
services job openings fell by one-third year-to-year while openings in
the education &amp; health sectors also were weak and they fell
7.6%. Openings in retail trade fell a slight 0.3% y/y.
By region, openings in the South, the Midwest and the West
were down by roughly one third year-to-year and in the Northeast they
were down by one quarter.
The hires rate held steady versus December
at 3.3% which was still near the lowest in the series' short eight year
history.The hires rate is the number of hires during the month
divided by employment.The actual number of hires fell by
11.9% year-to-year. The construction sector showed a 4.3% increase
versus last year but elsewhere hires were quite weak. In the factory
sector, hires fell 33.5% y/y and in the professional &amp; business
services sector they fell 14.8%. In the leisure and hospitality sector,
hires fell 18.1% y/y. Even in the educational &amp; health sector
hires fell 5.0%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311b.jpg" align="right" border="0" height="265" width="353">
The job separations rate held steady at
3.6%, about where it's been since early 2008. Separations
include quits, layoffs, discharges, and other separations as well as
retirements. The level of job separations fell 3.5% y/y.
The JOLTS survey dates only to December 2000 but has followed
the movement in nonfarm payrolls, though the actual correlation between
the two series is low.
A description of the Jolts survey and the latest release from
the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's USECON
database.
Explaining trends in wages, work and occupations from
the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflapril2009_261.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a>
(Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January '08</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">Job Openings, Total&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.2</td>
<td>2.3</td>
<td>3.0</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,991</td>
<td>3,224</td>
<td>4,332</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.3</td>
<td>3.3</td>
<td>3.6</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,399</td>
<td>4,508</td>
<td>4,995</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Grows Sharply With Recession &amp; TARP 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 11, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311e.jpg" align="left" border="0" height="265" width="353">
The U.S. government ran a budget deficit of $192.8 billion
during February and for the first five months of this fiscal year the
deficit swelled to $764.5B. Both figures are substantially higher than
the deficits of $175.6B last February and $264.5B for the first five
months of FY08. The latest figure came in slightly below Consensus
projections for a February deficit of $203B.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311f.jpg" align="right" border="0" height="265" width="353">
Year-to-date the budget deficit is running at roughly 5.5% of
GDP. The Congressional Budget Office's recent deficit estimate of $1.2
trillion for FY09 amounts to 8.3% of GDP. It assumes that revenues will
fall 6.6% year-to-year and that outlays will increase 19.0%.
Net revenues during February fell 17.4% from February of last
year and for the first five months of FY09 they were down 11.0% y/y.
Individual income tax receipts fell 13.1 % y/y through February
reflecting higher unemployment. Corporate tax receipts mirror the
drying up of profitability and fell by nearly one-half. Growth in
employment taxes dropped to 0.9%, the least since late 2003, and
unemployment insurance tax receipts fell 9.9%. Real estate taxes fell
6.2% after 10.5% growth last year.
Swelled by TARP, U.S. government outlays surged by 32.0% from
last fiscal year's first five months. Outlays under the Government's
Troubled Asset Relief Program (TARP) amounted to $37.8B last month and
for the first four months of the program totaled $280.3B. The U.S.
Treasury has adopted the view that these TARP expenditures should be
counted like any other spending. When the banks repay the Treasury,
these funds will be counted as revenue. Accounted for in this way, TARP
causes a surge in the budget deficit when the funds are distributed to
the banks, but leads to a smaller deficit, or perhaps a surplus, when
repayments are received.
Defense spending (19% of total outlays) rose 7.1%. Medicare
expenditures (12% of outlays) increased by 10.9% and "income security"
spending (11% of outlays) jumped 21.1% after 7.5% growth last year.
Social security payments rose a steady 7.1% but net interest payments
continued to fall by more than one-quarter with lower interest rates.
The Government's financial data are available in Haver's USECON
database, with extensive detail available in the specialized GOVFIN.
The Economic Crisis and the Fiscal Crisis: 2009 and
Beyond from Alan J. Auerbach, University of California,
Berkeley, and William G. Gale, Brookings Institution, is available <a href="http://www.taxpolicycenter.org/UploadedPDF/411843_economic_crisis.pdf">here.
</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US
Government Finance</a> &nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2008</th>
<th scope="col">FY 2007</th>
<th scope="col">FY 2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-192.8B</td>
<td>$-86.5B</td>
<td>$-175.6B 
(2/08)</td>
<td>-$454.8B</td>
<td>-$161.5B</td>
<td>-$248.2B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$87.3B</td>
<td>$226.1B</td>
<td>-17.4%</td>
<td>-1.7%</td>
<td>6.7%</td>
<td>11.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$280.1B</td>
<td>$131.3B</td>
<td>-0.4%</td>
<td>9.1%</td>
<td>2.8%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
UK Trade Picture Show More
Deterioration 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 11, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311g.jpg" align="left" border="0" height="265" width="353">
In the UK both export and import flows are losing momentum
fast. Weak exports tell a tale of weakening growth in UK export
markets. Dropping imports tell of still weakening domestic demand. Both
series are quite weak and have a record of tracking one another
relatively closely. The deficit in goods and services trade widened
this month but the trends still seems to show a contraction phase is in
train (see chart). While exports fell more steeply than imports in
January, the two months of January and December taken together show
much more similar behavior. 
 

The trade gap is currently 41% of exports which is not far
from its peak ratio of nearly 45% (since 1990). The deficit is also 29%
of imports which is close to its max ratio of 31%. So while the deficit
has been gradually on the decline the size of the deficit relative to
the trade flows is expanding, effectively increasing its burden. 
 

Year-over-year UK export and import values are lower by about
7% and 6% respectively. But over the recent periods we get a better
taste of what is really in train. The annualized rate drop for exports
is 38% over three months compared to 28% for imports. Over six months
it&#8217;s 31% for exports compared to 25% for imports. Obviously the
unraveling has been recent and has some on with great vigor. Sterling
has dropped during this period, something that should help the UK to
hold its trade competitiveness. However, that makes things more
difficult for exporters based in the euro-Zone, trying to penetrate the
UK market and it has been the source of some UK e-Zone tensions. 


UK Trade trends for goods
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="grey3">
<td class="firstcol">Balance*</td>
<td>-££ 7.75</td>
<td>-££ 7.23</td>
<td>-££ 7.61</td>
<td>-££ 7.66</td>
<td>-££ 7.72</td>
</tr>
<tr class="grey2">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">All Exp</td>
<td>-4.0%</td>
<td>-1.8%</td>
<td>-37.8%</td>
<td>-31.0%</td>
<td>-6.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Capital gds</td>
<td>-6.7%</td>
<td>0.5%</td>
<td>-24.7%</td>
<td>-13.0%</td>
<td>-5.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Road Vehicles</td>
<td>-6.0%</td>
<td>-12.2%</td>
<td>-68.0%</td>
<td>-58.9%</td>
<td>-34.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Basic Materials</td>
<td>-14.6%</td>
<td>7.9%</td>
<td>-79.6%</td>
<td>-75.2%</td>
<td>-23.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food Feed Bev &amp; Tbco</td>
<td>-0.3%</td>
<td>7.3%</td>
<td>13.5%</td>
<td>5.4%</td>
<td>8.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">All IMP</td>
<td>-1.0%</td>
<td>-3.5%</td>
<td>-27.9%</td>
<td>-25.5%</td>
<td>-5.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Capital gds</td>
<td>-4.8%</td>
<td>-4.8%</td>
<td>-20.1%</td>
<td>-13.9%</td>
<td>-8.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Road Vehicles</td>
<td>-0.3%</td>
<td>-11.9%</td>
<td>-70.3%</td>
<td>-57.1%</td>
<td>-43.9%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Basic Materials</td>
<td>-15.2%</td>
<td>-4.5%</td>
<td>-61.8%</td>
<td>-53.4%</td>
<td>-30.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food Feed Bev &amp; Tbco</td>
<td>3.2%</td>
<td>-4.1%</td>
<td>14.4%</td>
<td>5.3%</td>
<td>10.9%</td>
</tr>
<tr class="grey2">
<td colspan="6">*Stg Blns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310k.jpg" width="353">
The latest survey of hiring intentions by 31,800 employers, performed by Manpower Inc., indicates the weakest plans since the &quot;credit crunch&quot; recession of 1980. The Manpower Index level of -1 for 2Q09 follows a string of steadily declining readings since the series&#39; peak in 2005-06. These figures are seasonally adjusted.
During the last ten years there has been a 70% correlation between the level of the Manpower Index and the quarterly change in nonfarm payroll employment.Only the overall figure is seasonally adjusted while industry detail is not.
On a not seasonally adjusted basis, the 2Q level indicates that 15% of firms intend to raise employment and 14% expected to lower the number of jobs. No change in employment is expected by 67% of firms. This is up from an average 59% who expected no change from 2006 to 2008.
Plans for the second quarter in the manufacturing sector are quite weak with a net reading of -7. This reflects 13% of employers who expect to raise employment versus 20% who expect to decrease it. In the construction industries, 16% expect to increase hiring while 20% expect to cut. In financial businesses, 12% expect higher employment while 10% expect a lower number of jobs.
Weakness in hiring plans is evenly spread across the nation&#39;s regions.
The Manpower figures can be found in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Manpower Inc Employment Outlook Surey</a></th>
<th scope="col">2Q 09</th>
<th scope="col">1Q 09</th>
<th scope="col">2Q 08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Net Higher (SA, %)</td>
<td>-1</td>
<td>10</td>
<td>15</td>
<td>13</td>
<td>18</td>
<td>21</td>
</tr>
</tbody>
</table>
</body>
</html>

The latest survey of hiring intentions by 31,800 employers, performed by Manpower Inc., indicates the weakest plans since the "credit crunch" recession of 1980. The Manpower Index level of -1 for 2Q09 follows a string of steadily [...]

Manpower Survey: 2Q09 Employment Seen As Weakest Since Credit Crunch Recession

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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: March 2009

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