Tom Moeller

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      <p>The outplacement firm of Challenger, Gray &amp; Christmas reported that
      job cut announcements edged down slightly to 41,835 (-24.4% y/y) during
      February but only dented the prior month's jump. Layoffs declined m/m in
      the retail, computers, automotive, transportation, commodities, consumer
      products, electronics, energy, entertainment/leisure, health care and
      legal industries. An increase in announcements occurred in the
      telecommunications, financial, food, industrial goods, education,
      insurance, media, pharmaceutical and utility industries. During
      the last ten years there has been a 62% correlation between the level of
      job cut announcements and the m/m change in payroll employment.</p>
      
      <p>Challenger also samples firms' hiring plans. They improved moderately
      to 11,054 (-88.0% y/y) due to more hiring in the retail, computer,
      industrial goods, electronics, financial and health care industries.
      Hiring plans eased in the aerospace, automotive, chemical, construction,
      food, insurance, legal, media, pharmaceutical, services and transportation
      industries.</p>
      
      <p>The Challenger figures are available in Haver's <b>SURVEYS</b>
      database.</p>
      
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        <thead>
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            <th class="firstcol" scope="col" >Challenger, Gray &amp;
              Christmas</th>
            <th scope="col" ><b>Feb</b></th>
            <th scope="col" ><b>Jan</b></th>
            <th scope="col" ><b>Dec</b></th>
            <th scope="col" ><b>Y/Y%</b></th>
            <th scope="col" ><b>2013</b></th>
            <th scope="col" ><b>2012</b></th>
            <th scope="col" ><b>2011</b></th>
          </tr>
        </thead>
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            <td class="firstcol" >Announced Job Cuts</td>
            <td  >41,835</td>
            <td  >45,017</td>
            <td  >30,623</td>
            <td  >-24.4</td>
            <td  >509,051</td>
            <td  >523,362</td>
            <td  >606,082</td>
          </tr>
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            <td class="firstcol" >Announced Hiring Plans</td>
            <td  >11,054</td>
            <td  >6,312</td>
            <td  >11,362</td>
            <td  >-88.0</td>
            <td  >764,206</td>
            <td  >630,447</td>
            <td  >537,572</td>
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The outplacement firm of Challenger, Gray & Christmas reported that job cut announcements edged down slightly to 41,835 (-24.4% y/y) during February but only dented the prior month's jump. Layoffs declined m/m in the retail, [...]

Challenger Job Cut Announcements Slip While Hiring Plans Improve

Robert Brusca

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German orders returned to their expansion path in January. Orders rose by 1.2% in January after slipping by 0.2% in December. Foreign orders rose by 1% while domestic orders advanced by 1.6% in January. Foreign orders rose for the third consecutive month while domestic orders rose following a drop a month earlier.
</p><p>
Foreign orders' rate of growth exceeds growth for domestic orders over three-months, six-months and twelve-months. Year-over-year foreign orders are up by 11.8% compared to a 4.5% advance for domestic orders. Year-over-year foreign orders have been exceeding domestic orders with regularity since May of 2012. These statistics are for the country with the largest current account surplus in the world.
</p><p>
In addition to running this persistent huge surplus, Germany's growth is being led predominately by export growth, not by rising domestic demand. Foreign orders are rising faster than domestic orders in nineteen of the last twenty months in terms of year-over-year rates of growth. Germany is sucking domestic demand out of the rest of the world to fire its economy and replacing it with inferior domestic demand growth.
</p><p>
This mix of growth is reflected in German-reported sales growth as well. Sales of capital goods items are soaring, rising by 12.9% year-over-year and by 5.2% (not annualized!) in January. Intermediate goods sales are up by 3.6% over one year. Consumer goods sales are up by just 1.6% over the last twelve months. Germany's hot exports are not giving rise to much domestic stimulus. And a pick-up in German domestic demand would contribute to export growth across the EMU, as other countries could tap into German demand growth. But they can't tap into German supply expansion so Germany's success in servicing foreign demand has no legs except through firing up domestic demand. German domestic growth is hampered as German population growth is working against domestic demand strength.
</p><p>
Germany has become a black hole for the forces of global domestic demand. German firms exploit that demand and take it off-stream- as other countries cannot exploit it after Germany does. When the impact of servicing this demand has its full force back home in Germany, domestic demand does not fire up by all that much.
</p><p>
Germany needs to become a proactive force for growth in the EMU. So long as German exports are growing faster than German imports there is a clear signal that Germany is living off export-led growth at a time when much weaker countries need to increase their output and hire their workers to keep their respective recoveries going. They need to reduce rates of unemployment around the EMU area, rates that tend to dwarf Germany's own rate of unemployment. Since these nations all are locked in the same currency area, EMU members cannot depreciate their currencies to regain lost competitive ground to Germany. Instead their road back to being competitive with Germany is long and hard. Germany will retain most of the advantage it has over fellow EMU members for many years even if those members set their sights and policies on redressing this competitiveness gap now. The process of getting back lost competitiveness is a tough one.
</p><p>
When you are in a currency union, national policies have to be much less about the greedy solution. Germany, for its own sake and prosperity, needs to make sure that its fellow EMU members are growing and prospering or tensions could build in the EMU again. As long as Germany's surplus is large and the gap is getting larger, we know that Germany is doing the euro area no favors.   
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German orders returned to their expansion path in January. Orders rose by 1.2% in January after slipping by 0.2% in December. Foreign orders rose by 1% while domestic orders advanced by 1.6% in January. Foreign orders rose for the [...]

German Orders Recover and Show Strength

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      <p>The labor market continues to show erratic improvement. Initial claims
      for unemployment insurance fell to 323,000 in the week ended March 1 from
      349,000 in the prior week, initially reported as 348,000. The latest level
      was the lowest since late-November. Expectations had been for 337,000
      claims in the Action Economics Forecast Survey. The four-week moving
      average of initial claims slipped to 336,500. During the last ten years
      there has been a 75% correlation between the level of claims and the m/m
      change in nonfarm payrolls.</p>
      
      <p>Continuing claims for unemployment insurance in the week ended February
      22 ticked lower to 2.907 million (-6.4% y/y) from 2.964 million. The
      four-week moving average slipped to 2.928 million. The insured rate of
      unemployment remained at 2.2% for the second week. This particular count
      covers only &quot;regular&quot; programs and does not include all extended
      benefit and other specialized jobless insurance programs. In the week of
      February 15, the latest available, the total of all benefit recipients
      declined to 3.399 million (-37.1% y/y). This broader measure is not
      seasonally adjusted. It compares to a cycle peak of 12.060 million in
      January 2010 and pre-recession figures that averaged 2.596 million in
      2007.</p>
      
      <p>By state, the insured rate of unemployment continued to vary greatly
      with Louisiana (1.18%), Florida (1.43%), Tennessee (1.48%), Texas (1.49%),
      North Carolina (1.85%), Indiana (1.93%) and Ohio (2.27%) at the low end of
      the range. At the high end were Michigan (3.23%), Massachusetts (3.39%),
      Illinois (3.52%), California (3.55%), New Jersey (4.12%), Pennsylvania (4.19%)
      and Alaska (5.68%). These data are not seasonally adjusted.</p>
      
      <p>Data on weekly unemployment insurance are contained in Haver's <b>WEEKLY</b>
      database and they are summarized monthly in <b>USECON</b>. Data for
      individual states are in <b>REGIONW</b>. The expectations figure is from
      the Action Economics survey, carried in the <b>AS1REPNA</b> database.</p>
      
      <p>Janet L. Yellen's remarks at the <b>Ceremonial Swearing-in</b> as Chair
      of the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/newsevents/speech/yellen20140305a.htm">here</a>.</p>
      
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            <th class="firstcol" 0801 >Unemployment Insurance (000s)</th>
            <th 0801 >03/01/14</th>
            <th 0801 >02/22/14</th>
            <th 0801 >02/15/14</th>
            <th 0801 >Y/Y %</th>
            <th 0801 >2013</th>
            <th 0801 >2012</th>
            <th 0801 >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" 0801 >Initial Claims</td>
            <td 0801  >323</td>
            <td 0801  >349</td>
            <td 0801  >334</td>
            <td 0801  >-5.0</td>
            <td 0801  >343</td>
            <td 0801  >374</td>
            <td 0801  >409</td>
          </tr>
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            <td class="firstcol" 0801 >Continuing Claims</td>
            <td 0801  >--</td>
            <td 0801  >2,907</td>
            <td 0801  >2,964</td>
            <td 0801  >-6.4</td>
            <td 0801  >2,980</td>
            <td 0801  >3,319</td>
            <td 0801  >3,742</td>
          </tr>
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            <td class="firstcol" 0801 >Insured Unemployment Rate (%)</td>
            <td 0801  >--</td>
            <td 0801  >2.2</td>
            <td 0801  >2.2</td>
            <td 0801  >2.4<br>
              (3/13)</td>
            <td 0801  >2.3</td>
            <td 0801  >2.6</td>
            <td 0801  >3.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0801 >Total &quot;All Programs&quot;
              (NSA)</td>
            <td 0801  >--</td>
            <td 0801  >--</td>
            <td 0801  >3.399 mil.</td>
            <td 0801  >-37.1</td>
            <td 0801  >4.659 mil.</td>
            <td 0801  >6.047 mil.</td>
            <td 0801  >7.750 mil.</td>
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The labor market continues to show erratic improvement. Initial claims for unemployment insurance fell to 323,000 in the week ended March 1 from 349,000 in the prior week, initially reported as 348,000. The latest level was the lowest [...]

U.S. Initial Claims for Jobless Insurance Move Lower

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      <p>The <b>ADP/Moody's
      National Employment Report indicated a 139,000</b> rise (1.9% y/y) in nonfarm
      private sector jobs during February.
      Expectations were for a 157,000 gain in the Action Economics Forecast
      Survey. Last
      month's rise followed increases of 127,000 and 191,000 during January and
      December, revised down from 175,000 and 227,000. During the last
      three months, job increases averaged 152,000, below the peak of 259,000 in
      February of 2012.</p>
      <p>The ADP survey is based on ADP's business payroll transaction system
      covering 406,000 companies and roughly 23 million employees. The data are
      processed by Moody's Analytics Inc., then calibrated and aligned with the
      BLS data. Extensive information on the methodology is available <a href="http://www.adpemploymentreport.com/common/docs/ADP-NER-Methodology-Exec-Summary.pdf">here</a>.</p>
      <p>A moderate 120,000 rise (2.0% y/y) in service-producing payrolls led job growth last month.
      The gain was, however, half the increase in November 2012. Jobs in professional and business
      services increased 33,000 (2.8% y/y), transportation and utilities
      employment grew 32,000 (1.9% y/y) while financial activities headcount
      slipped 1,000 (+0.5% y/y). Goods-producing payrolls rose 19,000 (1.5%
      y/y). Factory sector employment edged up 1,000 (0.4% y/y) while construction payrolls
      increased 14,000 (3.5%
      y/y), the weakest monthly rise since August.</p>
      <p>Hiring amongst small businesses totaled 59,000 (2.1% y/y). Medium-sized
      firms' payrolls advanced 35,000 (1.4% y/y) while jobs at large-size
      companies rose 44,000 (2.4% y/y).</p>
      <p>The ADP National Employment Report data are maintained in Haver's <b>USECON</b>
      database; historical figures date back to March 2001. The figures in this
      report cover jobs only in the private sector. The expectation figure is
      available in Haver's <b>AS1REPNA</b> database.</p>
      <p>The Fed's latest <b>Beige Book</b> covering regional economic
      conditions can be found here <a href="http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201403.htm">http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201403.htm</a></p>
      <table class="centered" border="0" cellSpacing="0" width="1871">
        <thead>
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            <th class="firstcol" scope="col" width="1118">ADP/Moody's National
              Employment Report</th>
            <th scope="col" width="107">Feb</th>
            <th scope="col" width="107">Jan</th>
            <th scope="col" width="107">Dec</th>
            <th scope="col" width="107">Y/Y</th>
            <th scope="col" width="107">2013</th>
            <th scope="col" width="107">2012</th>
            <th scope="col" width="107">2011</th>
          </tr>
        </thead>
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            <td class="firstcol" width="1118">Nonfarm Private Payroll Employment
              (m/m chg, 000s)</td>
            <td align="center" width="107">139</td>
            <td align="center" width="107">127</td>
            <td align="center" width="107">191</td>
            <td align="center" width="107">1.9%</td>
            <td align="center" width="107">2.0%</td>
            <td align="center" width="107">2.3%</td>
            <td align="center" width="107">1.8%</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="1118">&nbsp;Small Payroll (1-49)</td>
            <td align="center" width="107">59</td>
            <td align="center" width="107">52</td>
            <td align="center" width="107">91</td>
            <td align="center" width="107">2.1</td>
            <td align="center" width="107">2.1</td>
            <td align="center" width="107">2.5</td>
            <td align="center" width="107">1.1</td>
          </tr>
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            <td class="firstcol" width="1118">&nbsp;Medium Payroll (1-49)</td>
            <td align="center" width="107">35</td>
            <td align="center" width="107">49</td>
            <td align="center" width="107">46</td>
            <td align="center" width="107">1.4</td>
            <td align="center" width="107">1.6</td>
            <td align="center" width="107">2.0</td>
            <td align="center" width="107">2.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="1118">&nbsp;Large Payroll (&gt;500)</td>
            <td align="center" width="107">44</td>
            <td align="center" width="107">27</td>
            <td align="center" width="107">55</td>
            <td align="center" width="107">2.4</td>
            <td align="center" width="107">2.3</td>
            <td align="center" width="107">2.4</td>
            <td align="center" width="107">2.7</td>
          </tr>
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            <td class="firstcol" width="1118">Goods-Producing</td>
            <td align="center" width="107">19</td>
            <td align="center" width="107">12</td>
            <td align="center" width="107">36</td>
            <td align="center" width="107">1.5</td>
            <td align="center" width="107">1.6</td>
            <td align="center" width="107">2.2</td>
            <td align="center" width="107">1.7</td>
          </tr>
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            <td class="firstcol" width="1118">&nbsp;Manufacturing</td>
            <td align="center" width="107">1</td>
            <td align="center" width="107">-6</td>
            <td align="center" width="107">16</td>
            <td align="center" width="107">0.4</td>
            <td align="center" width="107">0.6</td>
            <td align="center" width="107">1.6</td>
            <td align="center" width="107">1.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="1118">Service-Producing</td>
            <td align="center" width="107">120</td>
            <td align="center" width="107">116</td>
            <td align="center" width="107">154</td>
            <td align="center" width="107">2.0</td>
            <td align="center" width="107">2.0</td>
            <td align="center" width="107">2.3</td>
            <td align="center" width="107">1.8</td>
          </tr>
        </tbody>
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      <span id="articletitle">U.S. ISM Nonmanufacturing Index Drops to Four Year
      Low</span><br>
      <span id="byline">by <a href="http://www.haver.com/comment/Moeller.html">Tom
      Moeller</a>&nbsp;&nbsp;March 5, 2014</span><span id="articletext">
      <p>The <b>Composite Index for the service and construction sectors</b>
      from the Institute for Supply Management (ISM) plunged last month to 51.6,
      the lowest reading since February 2010. The latest figure fell short of
      expectations for 53.2 in the Action Economics Forecast Survey. During the last ten years, there has been a 75% correlation between the
      level of the nonmanufacturing composite index and the q/q change in real
      GDP for the service and the construction sectors.</p>
      <p><b>Haver Analytics calculates an index</b> using the ISM
      nonmanufacturing series and the ISM manufacturing sector index released
      Monday. The February figure fell to 51.8, also the lowest reading since
      February 2010. During the last ten years, there has been a 76%
      correlation between the composite index and the quarterly change in real
      GDP.</p>
      <p>Dragging the total index lower last month was an 8.9 point drop in the
      employment component to 47.5. This indication of m/m contraction in
      non-manufacturing payrolls was the weakest reading since March 2010.
      During the last ten years, there has been an 89% correlation between the
      employment index and the m/m change in private service sector plus
      construction payrolls. The business activity index showed a lesser 1.7
      point decline to 54.6, the weakest reading since December. The supplier
      delivery index nudged up to 53.0, indicating the slowest delivery speeds
      since March of last year. The new orders series also inched up to 51.3 but
      remained near the four year low.&nbsp;</p>
      <p>The prices paid index fell to 53.7 and reversed most of the gains in
      the prior two months.
      Twenty three percent of respondents indicated higher prices last month while
      six percent reported lower. During the last ten years, there has
      been a 78% correlation between the price index and the q/q change in the
      GDP services chain price index.</p>
      <p>Beginning with the January 2008 Nonmanufacturing <cite>Report On
      Business, </cite>the composite index is calculated as an indication of
      overall economic conditions for the non-manufacturing sector. It is a
      composite index based on the diffusion indices of four of the indicators
      (business activity, new orders, employment and supplier deliveries) with
      equal weights. Readings above 50 indicate expansion in activity.</p>
      <p>The ISM data are available in Haver's <b>USECON</b> database. The
      expectations figure from ACTION ECONOMICS is in the <b>AS1REPNA </b>database.&nbsp;</p>
      <table class="centered" border="0" cellSpacing="0" width="1871">
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            <th class="firstcol" scope="col" width="935"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
              Nonmanufacturing Survey (SA)</a></th>
            <th scope="col" width="133">Feb</th>
            <th scope="col" width="133">Jan</th>
            <th scope="col" width="133">Dec</th>
            <th scope="col" width="133">Feb'13</th>
            <th scope="col" width="133">2013</th>
            <th scope="col" width="133">2012</th>
            <th scope="col" width="134">2011</th>
          </tr>
        </thead>
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            <td class="firstcol" width="935">Composite Diffusion Index</td>
            <td align="center" width="133">51.6</td>
            <td align="center" width="133">54.0</td>
            <td align="center" width="133">53.0</td>
            <td align="center" width="133">54.8</td>
            <td align="center" width="133">54.7</td>
            <td align="center" width="133">54.6</td>
            <td align="center" width="134">54.4</td>
          </tr>
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            <td class="firstcol" width="935">&nbsp;&nbsp; Business Activity</td>
            <td align="center" width="133">54.6</td>
            <td align="center" width="133">56.3</td>
            <td align="center" width="133">54.3</td>
            <td align="center" width="133">56.3</td>
            <td align="center" width="133">56.7</td>
            <td align="center" width="133">57.7</td>
            <td align="center" width="134">57.2</td>
          </tr>
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            <td class="firstcol" width="935">&nbsp;&nbsp; New Orders</td>
            <td align="center" width="133">51.3</td>
            <td align="center" width="133">50.9</td>
            <td align="center" width="133">50.4</td>
            <td align="center" width="133">56.0</td>
            <td align="center" width="133">55.9</td>
            <td align="center" width="133">56.6</td>
            <td align="center" width="134">56.3</td>
          </tr>
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            <td class="firstcol" width="935">&nbsp;&nbsp; Employment</td>
            <td align="center" width="133">47.5</td>
            <td align="center" width="133">56.4</td>
            <td align="center" width="133">55.6</td>
            <td align="center" width="133">55.5</td>
            <td align="center" width="133">54.4</td>
            <td align="center" width="133">53.5</td>
            <td align="center" width="134">52.4</td>
          </tr>
          <tr>
            <td class="firstcol" width="935">&nbsp;&nbsp; Supplier Deliveries
              (NSA)</td>
            <td align="center" width="133">53.0</td>
            <td align="center" width="133">52.5</td>
            <td align="center" width="133">51.5</td>
            <td align="center" width="133">51.5</td>
            <td align="center" width="133">51.7</td>
            <td align="center" width="133">50.6</td>
            <td align="center" width="134">51.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="935">Prices Index</td>
            <td align="center" width="133">53.7</td>
            <td align="center" width="133">57.1</td>
            <td align="center" width="133">54.7</td>
            <td align="center" width="133">57.4</td>
            <td align="center" width="133">55.6</td>
            <td align="center" width="133">59.3</td>
            <td align="center" width="134">65.1</td>
          </tr>
        </tbody>
      </table>
      </span>
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      <span id="articletitle">U.S. Mortgage Loan Applications Stabilize</span><br>
      <span id="byline">by <a href="http://www.haver.com/comment/Moeller.html">Tom
      Moeller</a>&nbsp;&nbsp;March 5, 2014</span><span id="articletext">
      <p>The Mortgage Bankers Association indicated that their total mortgage market
      index increased 9.4% last week (-55.9% y/y) following three successive
      weeks of sharp decline. Applications to <i>purchase</i> a home rebounded
      9.4% (-19.1% y/y) after four weeks of decline. Applications to <i>refinance</i>
      a loan improved 9.6% (-66.1% y/y) and made up most of the prior week's
      drop.</p>
      <p>The effective interest rate on a 15-year mortgage slipped last week to
      3.57% but remained up from the 2.89%
      low early in May of 2013. The effective rate on a 30-year fixed rate loan
      edged lower to 4.56% last week while the rate on a Jumbo 30-year loan
      slipped to 4.43%. The effective interest rate on an adjustable
      5-year mortgage at 3.23% remained up from its low of 2.59% at the
      beginning of May last year.</p>
      <p>Applications for fixed interest rate loans fell 57.5% y/y while
      adjustable rate loan applications fell 17.5% y/y. The average mortgage
      loan size rose to $231,600, up sharply from $209,000 averaged in February
      of last year. The average loan size for home purchases held at $269,400 last week and for refinancings it
      was $204,000.</p>
      <p>The survey covers over 75 percent of all U.S. retail residential
      mortgage applications, and has been conducted weekly since 1990.
      Respondents include mortgage bankers, commercial banks and thrifts. The
      base period and value for all indexes is March 16, 1990=100. The figures
      for weekly mortgage applications and interest rates are available in
      Haver's <b>SURVEYW</b> database.</p>
      <table class="centered" border="0" cellSpacing="0" width="1871">
        <thead>
          <tr>
            <th class="firstcol" scope="col" 0918 0925 width="855">MBA Mortgage
              Applications (SA, 3/16/90=100)</th>
            <th scope="col" 0918 0925 width="144">02/28/14</th>
            <th scope="col" 0918 0925 width="144">02/21/14</th>
            <th scope="col" 0918 0925 width="144">02/14/14</th>
            <th scope="col" 0918 0925 width="145">Y/Y%</th>
            <th scope="col" 0918 0925 width="145">2013</th>
            <th scope="col" 0918 0925 width="145">2012</th>
            <th scope="col" 0918 0925 width="145">2011</th>
          </tr>
        </thead>
        <tbody>
          <tr class="odd">
            <td class="firstcol" 0918 0925 width="855">Total Market Index</td>
            <td 0918 0925 align="center" width="144">381.4</td>
            <td 0918 0925 align="center" width="144">348.5</td>
            <td 0918 0925 align="center" width="144">380.9</td>
            <td 0918 0925 align="center" width="145">-55.9</td>
            <td 0918 0925 align="center" width="145">616.6</td>
            <td 0918 0925 align="center" width="145">813.8</td>
            <td 0918 0925 align="center" width="145">572.3</td>
          </tr>
          <tr>
            <td class="firstcol" 0918 0925 width="855">&nbsp;Purchase</td>
            <td 0918 0925 align="center" width="144">169.6</td>
            <td 0918 0925 align="center" width="144">155.0</td>
            <td 0918 0925 align="center" width="144">160.7</td>
            <td 0918 0925 align="center" width="145">-19.1</td>
            <td 0918 0925 align="center" width="145">197.5</td>
            <td 0918 0925 align="center" width="145">187.8</td>
            <td 0918 0925 align="center" width="145">182.6</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0918 0925 width="855">&nbsp;Refinancing</td>
            <td 0918 0925 align="center" width="144">1,597.6</td>
            <td 0918 0925 align="center" width="144">1,457.2</td>
            <td 0918 0925 align="center" width="144">1,644.5</td>
            <td 0918 0925 align="center" width="145">-66.1</td>
            <td 0918 0925 align="center" width="145">3,070.0</td>
            <td 0918 0925 align="center" width="145">4,505.0</td>
            <td 0918 0925 align="center" width="145">2,858.4</td>
          </tr>
          <tr>
            <td class="firstcol" 0918 0925 width="855">15-Year Mortgage
              Effective Interest Rate (%)</td>
            <td 0918 0925 align="center" width="144">3.57</td>
            <td 0918 0925 align="center" width="144">3.63</td>
            <td 0918 0925 align="center" width="144">3.63</td>
            <td 0918 0925 align="center" width="145">3.10<br>
              (2/13)</td>
            <td 0918 0925 align="center" width="145">3.42</td>
            <td 0918 0925 align="center" width="145">3.25</td>
            <td 0918 0925 align="center" width="145">3.97</td>
          </tr>
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The ADP/Moody's National Employment Report indicated a 139,000 rise (1.9% y/y) in nonfarm private sector jobs during February. Expectations were for a 157,000 gain in the Action Economics Forecast Survey. Last month's rise followed [...]

U.S. ADP Job Growth is Constrained

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<p><a href="/comment/140305m_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305m.png" align="left"></a>
The services sector in the European Monetary Union improved in February, registering a diffusion value of 52.57, up from 51.57 in January. The 12-month average for the diffusion metric is 49.94. The euro area has progressed to a point where the services sector is advancing. However, when we take a look at this value and place it in its queue of historic values, it resides in the 49.7th percentile, which is just below the median. Although the euro area has shown an expansion, it has not yet reached the point of normalcy.let alone `recovery.'
</p><p>
Germany also saw its services PMI improve in February, along with Italy. France, Spain, and Ireland saw slippage in their service sector readings in February. Ireland saw a sharp decline to 57.47 from 61.54. However, despite that drop, Ireland's reading still sits at about the 70th percentile of its historic queue. Spain, at 53.70, sits in the 73rd percentile of its historic queue. But France, having slipped to 47.17 from 48.90, now sits in the bottom 13th percentile of its historic queue, at an exceptionally weak reading. There continues to be a good deal of dispersion in the performance metrics for the EMU services sector.
</p><p>
The UK is not a member of the single currency union. It saw a very slight drop in its services PMI to 58.2 from 58.3. That's still represents a slight pick up from 58.0, its 12-months average. The UK measure sits in the 83rd percentile of its historic queue and is among one of the strongest services sectors in Europe.
</p><p>
Along with the services sectors, we show surveys of consumer confidence in a number of countries and continue to find that there is a great divide between Germany and other EMU members when it comes to the assessment of consumer sentiment. Germany's metric is near the top 20th percentile of its historic queue of data while France is in the bottom 30% and Italy and Spain are just above the 52nd percentile of their respective historic queues. In the UK, we find a strong showing for consumer confidence as its consumer sentiment gauge resides in the 98th percentile of its historic queue. 
</p><p>
The services sector is showing improvement in Europe. Although the metric itself points to service sector growth, we have to remember that the services sector usually does grow and that its current value is actually below its median performance. For those looking for economic recovery, `recovery per se' is usually a period when growth exceeds its long-term average -and its long-run potential - for a spell. Europe is not there yet. There also are, as we saw, substantial differences among member countries in the performance of their respective services sectors. In addition, German consumer confidence is leagues ahead of confidence levels in fellow monetary union member countries although its level of confidence is exceeded by consumer confidence in the UK.
</p><p>
By comparison, the US nonmanufacturing sector (services plus construction) registered a small decline in February. Although its diffusion value is only slightly below the value for Europe, the queue standing for the US PMI is in the bottom 25th percentile of its historic queue. Services sectors around the world continue to lag which is a problem because services sectors tend to be the job creating sectors. Jobs simply are not being created with enough vigor in the US and Europe. Domestic demand continues to lag in most countries, while those same countries continue to put their hopes on export-led growth, which depends on domestic demand in other countries. There is an obvious inconsistency here.
</p><p>
There has been no sense of trying to manage and coordinate international growth. There has been no sense of trying to reduce the international imbalances where they seem to be the most entrenched. Europe has gone the route of addressing internal budget imbalances alone. That effort has produced some results, but also has had enormous side-effects on growth. There is a great deal of excitement about Europe finally turning the corner to growth, but perhaps we put too many eggs in that basket as Europe's growth continues to be measured and is rife with internal inconsistencies. Europe may have achieved growth, but it has not achieved recovery yet. Some think that, with the PMI indicators for Europe improving, some of the heat will be taken off of the European Central Bank. However, Europe is not exactly knocking them dead with its strength and the growth irregularities within the Community are still severe and threaten continuity. It is always it's the laggard countries within the Community that need the help - and some of them continue to lag badly.
</p><p>
For its part, the Federal Reserve has already taken several steps down the road of tapering, to reduce its accommodative stance. However, economic statistics, since the Fed began taking those steps, have become mixed and weaker. The question surrounding the US economy revolves around the weather which has been unseasonably cold, blustery and filled with storms. Is the recent US weakening, due to weather or due to a change in the economic climate? For the most part, there are unclear signs. The weather seems to have disrupted the economy to some extent. Yet, it's not uncommon for economists overestimate the impact of storms on the economy since when one part of economic activity is affected often another part of economic activity is stimulated. As a result of that, the deadweight loss from storms tends to be overestimated. I dwell on the US to some extent because Europe depends on US domestic demand to fire its export machine and it's unclear that the US is going to provide that kind of growth. China has publicly and purposely declared that it is trying to stimulate its domestic growth through the revival of domestic demand. Perhaps Europe should try to do the same thing; especially having Germany, the country with the largest current account surplus in the world, in it's very midst?
</p>

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The services sector in the European Monetary Union improved in February, registering a diffusion value of 52.57, up from 51.57 in January. The 12-month average for the diffusion metric is 49.94. The euro area has progressed to a point [...]

Services Mostly Turn Higher in EMU

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      <p><a href="/comment/140305i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305i.png"></a>
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      <p>The <b>Composite Index for the service and construction sectors</b>
      from the Institute for Supply Management (ISM) plunged last month to 51.6,
      the lowest reading since February 2010. The latest figure fell short of
      expectations for 53.2 in the Action Economics Forecast Survey. During the last ten years, there has been a 75% correlation between the
      level of the nonmanufacturing composite index and the q/q change in real
      GDP for the service and the construction sectors.</p>
      
      <p><b>Haver Analytics calculates an index</b> using the ISM
      nonmanufacturing series and the ISM manufacturing sector index released
      Monday. The February figure fell to 51.8, also the lowest reading since
      February 2010. During the last ten years, there has been a 76%
      correlation between the composite index and the quarterly change in real
      GDP.</p>
      
      <p>Dragging the total index lower last month was an 8.9 point drop in the
      employment component to 47.5. This indication of m/m contraction in
      non-manufacturing payrolls was the weakest reading since March 2010.
      During the last ten years, there has been an 89% correlation between the
      employment index and the m/m change in private service sector plus
      construction payrolls. The business activity index showed a lesser 1.7
      point decline to 54.6, the weakest reading since December. The supplier
      delivery index nudged up to 53.0, indicating the slowest delivery speeds
      since March of last year. The new orders series also inched up to 51.3 but
      remained near the four year low.</p>
      
      <p>The prices paid index fell to 53.7 and reversed most of the gains in
      the prior two months. Twenty three percent of respondents indicated higher prices 
      last month while six percent reported lower. During the last ten years, there has
      been a 78% correlation between the price index and the q/q change in the
      GDP services chain price index.</p>
      
      <p>Beginning with the January 2008 Nonmanufacturing <cite>Report On
      Business, </cite>the composite index is calculated as an indication of
      overall economic conditions for the non-manufacturing sector. It is a
      composite index based on the diffusion indices of four of the indicators
      (business activity, new orders, employment and supplier deliveries) with
      equal weights. Readings above 50 indicate expansion in activity.</p>
      
      <p>The ISM data are available in Haver's <b>USECON</b> database. The
      expectations figure from ACTION ECONOMICS is in the <b>AS1REPNA </b>database.</p>
      
      <p><a href="/comment/140305k_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305k.png"></a>
      <a href="/comment/140305l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305l.png"></a></p>
      
      <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" ><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
              Nonmanufacturing Survey (SA)</a></th>
            <th scope="col" >Feb</th>
            <th scope="col" >Jan</th>
            <th scope="col" >Dec</th>
            <th scope="col" >Feb'13</th>
            <th scope="col" >2013</th>
            <th scope="col" >2012</th>
            <th scope="col" >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Composite Diffusion Index</td>
            <td  >51.6</td>
            <td  >54.0</td>
            <td  >53.0</td>
            <td  >54.8</td>
            <td  >54.7</td>
            <td  >54.6</td>
            <td  >54.4</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp; Business Activity</td>
            <td  >54.6</td>
            <td  >56.3</td>
            <td  >54.3</td>
            <td  >56.3</td>
            <td  >56.7</td>
            <td  >57.7</td>
            <td  >57.2</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp; New Orders</td>
            <td  >51.3</td>
            <td  >50.9</td>
            <td  >50.4</td>
            <td  >56.0</td>
            <td  >55.9</td>
            <td  >56.6</td>
            <td  >56.3</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp; Employment</td>
            <td  >47.5</td>
            <td  >56.4</td>
            <td  >55.6</td>
            <td  >55.5</td>
            <td  >54.4</td>
            <td  >53.5</td>
            <td  >52.4</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp; Supplier Deliveries
              (NSA)</td>
            <td  >53.0</td>
            <td  >52.5</td>
            <td  >51.5</td>
            <td  >51.5</td>
            <td  >51.7</td>
            <td  >50.6</td>
            <td  >51.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Prices Index</td>
            <td  >53.7</td>
            <td  >57.1</td>
            <td  >54.7</td>
            <td  >57.4</td>
            <td  >55.6</td>
            <td  >59.3</td>
            <td  >65.1</td>
           </tr>
              </tbody>
            </table>
            </span>
</body></html>

The Composite Index for the service and construction sectors from the Institute for Supply Management (ISM) plunged last month to 51.6, the lowest reading since February 2010. The latest figure fell short of expectations for 53.2 in [...]

U.S. ISM Nonmanufacturing Index Drops to Four Year Low

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      <p><a href="/comment/140305e_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305e.png"></a>
      <a href="/comment/140305f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305f.png"></a></p>
     
      <p>The Mortgage Bankers Association indicated that their total mortgage market
      index increased 9.4% last week (-55.9% y/y) following three successive
      weeks of sharp decline. Applications to <i>purchase</i> a home rebounded
      9.4% (-19.1% y/y) after four weeks of decline. Applications to <i>refinance</i>
      a loan improved 9.6% (-66.1% y/y) and made up most of the prior week's
      drop.</p>
      
      <p>The effective interest rate on a 15-year mortgage slipped last week to
      3.57% but remained up from the 2.89%
      low early in May of 2013. The effective rate on a 30-year fixed rate loan
      edged lower to 4.56% last week while the rate on a Jumbo 30-year loan
      slipped to 4.43%. The effective interest rate on an adjustable
      5-year mortgage at 3.23% remained up from its low of 2.59% at the
      beginning of May last year.</p>
      
      <p>Applications for fixed interest rate loans fell 57.5% y/y while
      adjustable rate loan applications fell 17.5% y/y. The average mortgage
      loan size rose to $231,600, up sharply from $209,000 averaged in February
      of last year. The average loan size for home purchases held at $269,400 last week and for refinancings it
      was $204,000.</p>
      
      <p>The survey covers over 75 percent of all U.S. retail residential
      mortgage applications, and has been conducted weekly since 1990.
      Respondents include mortgage bankers, commercial banks and thrifts. The
      base period and value for all indexes is March 16, 1990=100. The figures
      for weekly mortgage applications and interest rates are available in
      Haver's <b>SURVEYW</b> database.</p>

<p><a href="/comment/140305g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305g.png"></a>
      <a href="/comment/140305h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305h.png"></a></p>
      
      <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" 0918 0925 >MBA Mortgage
              Applications (SA, 3/16/90=100)</th>
            <th scope="col" 0918 0925 >02/28/14</th>
            <th scope="col" 0918 0925 >02/21/14</th>
            <th scope="col" 0918 0925 >02/14/14</th>
            <th scope="col" 0918 0925 >Y/Y%</th>
            <th scope="col" 0918 0925 >2013</th>
            <th scope="col" 0918 0925 >2012</th>
            <th scope="col" 0918 0925 >2011</th>
          </tr>
        </thead>
        <tbody>
          <tr class="odd">
            <td class="firstcol" 0918 0925 >Total Market Index</td>
            <td 0918 0925  >381.4</td>
            <td 0918 0925  >348.5</td>
            <td 0918 0925  >380.9</td>
            <td 0918 0925  >-55.9</td>
            <td 0918 0925  >616.6</td>
            <td 0918 0925  >813.8</td>
            <td 0918 0925  >572.3</td>
          </tr>
          <tr>
            <td class="firstcol" 0918 0925 >&nbsp;Purchase</td>
            <td 0918 0925  >169.6</td>
            <td 0918 0925  >155.0</td>
            <td 0918 0925  >160.7</td>
            <td 0918 0925  >-19.1</td>
            <td 0918 0925  >197.5</td>
            <td 0918 0925  >187.8</td>
            <td 0918 0925  >182.6</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" 0918 0925 >&nbsp;Refinancing</td>
            <td 0918 0925  >1,597.6</td>
            <td 0918 0925  >1,457.2</td>
            <td 0918 0925  >1,644.5</td>
            <td 0918 0925  >-66.1</td>
            <td 0918 0925  >3,070.0</td>
            <td 0918 0925  >4,505.0</td>
            <td 0918 0925  >2,858.4</td>
          </tr>
          <tr>
            <td class="firstcol" 0918 0925 >15-Year Mortgage
              Effective Interest Rate (%)</td>
            <td 0918 0925  >3.57</td>
            <td 0918 0925  >3.63</td>
            <td 0918 0925  >3.63</td>
            <td 0918 0925  >3.10<br>
              (2/13)</td>
            <td 0918 0925  >3.42</td>
            <td 0918 0925  >3.25</td>
            <td 0918 0925  >3.97</td>
     </tr>
              </tbody>
            </table>
            </span>
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The Mortgage Bankers Association indicated that their total mortgage market index increased 9.4% last week (-55.9% y/y) following three successive weeks of sharp decline. Applications to purchase a home rebounded 9.4% (-19.1% y/y) [...]

U.S. Mortgage Loan Applications Stabilize

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      <p></p>
      
      <p><a href="/comment/140305a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305a.png"></a>
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      <p>The <b>ADP/Moody's National Employment Report indicated a 139,000</b> rise (1.9% y/y) in nonfarm
      private sector jobs during February. Expectations were for a 157,000 gain in the Action Economics Forecast
      Survey. Last month's rise followed increases of 127,000 and 191,000 during January and
      December, revised down from 175,000 and 227,000. During the last
      three months, job increases averaged 152,000, below the peak of 259,000 in
      February of 2012.</p>
      
      <p>The ADP survey is based on ADP's business payroll transaction system
      covering 406,000 companies and roughly 23 million employees. The data are
      processed by Moody's Analytics Inc., then calibrated and aligned with the
      BLS data. Extensive information on the methodology is available <a href="http://www.adpemploymentreport.com/common/docs/ADP-NER-Methodology-Exec-Summary.pdf">here</a>.</p>
      
      <p>A moderate 120,000 rise (2.0% y/y) in service-producing payrolls led job growth last month.
      The gain was, however, half the increase in November 2012. Jobs in professional and business
      services increased 33,000 (2.8% y/y), transportation and utilities
      employment grew 32,000 (1.9% y/y) while financial activities headcount
      slipped 1,000 (+0.5% y/y). Goods-producing payrolls rose 19,000 (1.5%
      y/y). Factory sector employment edged up 1,000 (0.4% y/y) while construction payrolls
      increased 14,000 (3.5% y/y), the weakest monthly rise since August.</p>
      
      <p>Hiring amongst small businesses totaled 59,000 (2.1% y/y). Medium-sized
      firms' payrolls advanced 35,000 (1.4% y/y) while jobs at large-size
      companies rose 44,000 (2.4% y/y).</p>
      
      <p>The ADP National Employment Report data are maintained in Haver's <b>USECON</b>
      database; historical figures date back to March 2001. The figures in this
      report cover jobs only in the private sector. The expectation figure is
      available in Haver's <b>AS1REPNA</b> database.</p>
      
      <p>The Fed's latest <b>Beige Book</b> covering regional economic
      conditions can be found <a href="http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201403.htm">here</a>.</p>
      
      <p><a href="/comment/140305c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305c.png"></a>
      <a href="/comment/140305d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/140305d.png"></a></p>
      
      <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" >ADP/Moody's National
              Employment Report</th>
            <th scope="col" >Feb</th>
            <th scope="col" >Jan</th>
            <th scope="col" >Dec</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" >Nonfarm Private Payroll Employment
              (m/m chg, 000s)</td>
            <td  >139</td>
            <td  >127</td>
            <td  >191</td>
            <td  >1.9%</td>
            <td  >2.0%</td>
            <td  >2.3%</td>
            <td  >1.8%</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Small Payroll (1-49)</td>
            <td  >59</td>
            <td  >52</td>
            <td  >91</td>
            <td  >2.1</td>
            <td  >2.1</td>
            <td  >2.5</td>
            <td  >1.1</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Medium Payroll (1-49)</td>
            <td  >35</td>
            <td  >49</td>
            <td  >46</td>
            <td  >1.4</td>
            <td  >1.6</td>
            <td  >2.0</td>
            <td  >2.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Large Payroll (&gt;500)</td>
            <td  >44</td>
            <td  >27</td>
            <td  >55</td>
            <td  >2.4</td>
            <td  >2.3</td>
            <td  >2.4</td>
            <td  >2.7</td>
          </tr>
          <tr>
            <td class="firstcol" >Goods-Producing</td>
            <td  >19</td>
            <td  >12</td>
            <td  >36</td>
            <td  >1.5</td>
            <td  >1.6</td>
            <td  >2.2</td>
            <td  >1.7</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Manufacturing</td>
            <td  >1</td>
            <td  >-6</td>
            <td  >16</td>
            <td  >0.4</td>
            <td  >0.6</td>
            <td  >1.6</td>
            <td  >1.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Service-Producing</td>
            <td  >120</td>
            <td  >116</td>
            <td  >154</td>
            <td  >2.0</td>
            <td  >2.0</td>
            <td  >2.3</td>
            <td  >1.8</td>
           </tr>
              </tbody>
            </table>
            </span>
</body></html>

U.S. ADP Job Growth is Constrained By Bad Weather

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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

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

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

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

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The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

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- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

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Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

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The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

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Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

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

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

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

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

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

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

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3PzXXKrkHcwtOLipohEdnB?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tariff Truce, Tenuous Trust

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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 2014

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